Who Needs a California Contractor�s License?
Anyone who works as a contractor in California and charges more than $500 for a single project or multiple projects (labor, materials and other costs) must be licensed by the California Contractors State License Board (CSLB). This requirement applies to individuals and business entities working as contractors, subcontractors, specialty contractors, or home improvement specialists.
Working as a contractor without being properly licensed can result in a misdemeanor conviction that carries the potential for fines and jail time.
What Does the Licensing Process Involve?
Every applicant for a new California contractor�s license must:
- Be at least 18 years old
- Meet certain experience requirements and submit a Certification of Work Experience
- Pass an examination
- Submit a completed application for Original Contractor�s License
- Undergo a fingerprint and criminal background check
- Obtain a $15,000 contractor�s surety bond or make a $15,000 cash deposit
- Pay the application processing fee (currently $330)
Contractors doing asbestos abatement, handling hazardous materials, or installing or removing underground storage tanks must also meet a number of licensing requirements in addition to those that apply to all contractors.
Why is a Contractor�s License Bond Required?
All license surety bonds serve as a guarantee to conduct business in accordance with all relevant statutes, rules, and regulations governing the industry. The aim is to protect others against financial loss due to the unlawful or unethical actions of the bonded individual. A contractor�s license bond is no different.
A contractor�s license bond protects the licensing agency, the California Contractors State License Board (CSLB), against liability for damages suffered by consumers as a result of a contractor�s failure to abide by the laws and ethical standards set forth in the terms and conditions of the bond. Any violation of those terms and conditions gives the aggrieved party the right to file a claim against the bond.
How Does The Bond Work?
When a claim is filed against the bond, the company that issued it (referred to as the �surety�) will first ensure that the claim is valid. If the contractor (also known as the bond�s �principal�) does not settle the claim quickly, the surety will pay the claim. The surety will then pursue the principal for reimbursement, as the principal is legally responsible for paying all claims.
What Does The Bond Cost?
The premium for a California contractor license bond is calculated as a small percentage of the required $15,000 bond amount. That percentage, known as the premium rate, is determined by the surety based largely on the contractor�s personal credit score and financial status. Applicants with good credit typically pay between 1% and 3%. Those with poor credit will likely pay a higher rate.
Get The Bond You Need
At Single Source Insurance, our experienced surety bond agents are knowledgeable about California�s contractor bonding requirements and are eager to help you get the bond you need. Apply online today!