Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your California contractor bond needs. Learn how to get a contractor’s license in California, below.
What Contractor Licenses Are Issued in California?
California’s Contractors State License Board (CSLB) issues contractor licenses in three broad categories:
- Class A licenses are for contractors whose work requires engineering knowledge.
- Class B licenses are for general contractors employing two or more types of subcontractors on a given project.
- Class C licenses are for contractors working in one or more of the 44 different specialized licensing classifications currently available in California.
The total labor and materials cost of one or more contracts to be awarded on a project must be $500 or more to bid on projects such as the construction or modification of buildings, highways, roads, parking facilities, railroads, excavations, or other structures anywhere in California.
What Are the Steps in the Licensing Process?
To begin the licensing process, first make sure you meet all age, experience, education, and examination requirements for licensure. Obtain the proper California business license and tax identification number. You’ll also need to purchase a $15,000 contractor license bond and complete the CSLB application form, which is available on the Board’s website.
Pay the required fees and submit the completed application package, including the contractor bond, proof of insurance (workers’ compensation and liability insurance, if applicable), fingerprinting Live Scan, disclosure statements, and any other supporting documentation.
Why is a Contractor License Bond Required?
A California contractor license bond serves these important purposes:
- It guarantees that the licensed contractor will operate in compliance with all applicable state laws and CSLB regulations.
- It protects CSLB (the bond’s “obligee”) against liability for losses stemming from a licensed contractor’s unlawful or unethical business conduct.
- It provides a way to compensate injured parties with valid claims against the bond for financial harm caused by the principal.
How Are Contractor License Bond Claims Paid?
The surety bond agreement between the bond’s principal (the licensed contractor), obligee, and surety is a legally binding contract that makes the principal solely responsible for paying valid claims. If the surety is unable to negotiate a mutually agreeable settlement for a valid claim, it must be paid. Unless the principal makes prompt payment, the surety will pay the claim on the principal’s behalf and then collect reimbursement from the principal.
How Much Does a California Contractor License Bond Cost?
The annual premium for a California contractor license bond is a small percentage of the required $15,000 bond amount, that percentage being the premium rate established by the obligee. The surety’s main concern is the risk of not being reimbursed by the principal for claims paid on the principal’s behalf. Consequently, the principal’s creditworthiness is the key factor in determining what the premium rate will be.
Good credit will earn the principal a premium rate in the standard market rate range of 1% to 2%. With lesser credit, the premium rate could be substantially higher.
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