Contractor License bonds are usually a third-party agreement between a surety, the contractor and the Obligee. The Contractors License Bond is different from most other surety bonds. The Contractor License Bond is executed by a surety in favor of the state that the contractor is licensed to do business.
Before an active contractor’s license can be issued or renewed, or an inactive license made active, the licensee must have a current Contractors License Bond or an approved alternative to the Contractor License Bond on file. The Contractors License Bond shall be an amount designated by each state and must follow state specific requirements for all classifications.
A contractor has an obligation not to commit any violation of contractor license law that is ground for disciplinary action against the license. If the contractor does not comply with the conditions of the Contractor License Bond, a claim can be filed with the surety company.
A Contractor License Bond is required from all active licensees. Consumers can file a claim against the bond for violations of the contractor’s license law by a licensee.
Consumers must file a Contractor License Bond claim with the surety company that executed the bond within a specific time frame. The surety companies will investigate any claim filed against a Contractor License Bond.
A Contractor License Bond may be cancelled within a specific time frame depending upon the language of the state required Contractor License Bond and the date that the state receives a cancellation notice from a Contractor License Bond surety company. If the Contractor License Bond is not reinstated or renewed before the cancellation date the contractor’s license can be suspended.
