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 North Carolina contractor license bond needs. Learn how to get a contractor’s license in North Carolina, below.
What Contractor Licenses Are Issued in North Carolina?
While North Carolina issues licenses to electrical, landscape, and HVAC licenses, the focus here is on the licensing of general contractors.
The North Carolina Board of General Contractors issues licenses in five different classifications:
- Building contractor
- Residential contractor
- Highway contractor
- Public utilities contractor
- Specialty contractor
Licenses in each of these categories are further classified as limited, intermediate, and unlimited classes based on the maximum allowable value of a single project.
What Are the Steps in the Licensing Process?
Before applying for a general contractor’s license of any type, you’ll need to register your business with the Office of the Secretary of State and meet certain eligibility requirements, including a passing grade on the applicable examination.
You’ll also need to demonstrate the required level of working capital or purchase a North Carolina contractor’s license bond, as illustrated below.
|License Class||Single Project Value||Required Surety Bond Amount|
|Limited||Up to $500,000||$175,000|
|Intermediate||Up to $1 million||$500,000|
|Unlimited||No limit||$1 million|
You’ll need to complete the online application, pay the fee, and submit all supporting documents, including the surety bond if you choose that option.
Why is a Contractor License Bond Required?
In North Carolina, purchasing a contractor’s license bond is an alternative to providing documentation of the amount of working capital required for licensure. The bond is a licensed contractor’s pledge to comply with all applicable statutes and regulations. It also indemnifies the state and the surety bond company against responsibility for paying claims stemming from the contractor’s unethical actions. A North Carolina contractor license bond provides an injured party a way to obtain compensation for such damages.
How Are North Carolina Contractor License Bond Claims Paid?
There are three parties to the legally binding contract established by the issuance of a contractor license bond:
- The state of North Carolina (the bond’s “obligee”)
- The contractor (the bond’s “principal”)
- The surety company (called simply the “surety”)
The terms of the surety bond agreement make the principal solely responsible for paying valid claims against the bond. Upon receipt of a claim, the surety will make sure it’s legitimate, and if the principal doesn’t pay it promptly, the surety will go ahead and pay it. The principal is legally responsible for repaying that debt to the surety.
How Much Does a North Carolina Contractor License Bond Cost?
If you’re wondering how much a North Carolina contractor license bond will cost you, it’s only a small percentage of the required bond amount. The surety will determine what that percentage (the premium rate) will be. Understandably, the surety’s main concern is being repaid for claims paid on the principal’s behalf, so the primary underwriting factor is the principal’s personal credit score.
If your credit is good, you’ll most likely pay a premium rate in the range of 1-2% of the required bond amount. For a limited general contractor’s license, that would mean an annual premium in the range of $1,750 to $3,500. Folks with lesser credit may pay a higher bond rate.
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