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 Arizona HVAC license bond needs. Learn how to get an HVAC license in Arizona, below.
What HVAC Contractor Licenses Are Issued in Arizona?
The Arizona Registrar of Contractors issues separate licenses for commercial and residential HVAC contractors. It also issues a dual license for contractors who do both residential and commercial HVAC work.
What Are the Steps in the Licensing Process?
Before applying for licensure as an HVAC contractor, if you will be operating as an LLC or corporation, you must register your business with the Arizona Corporation Commission.
Several eligibility requirements must be met before applying for an Arizona HVAC contractor license, including four years of work experience in the field and passing grades on the applicable trade exam and Arizona Business Management test. Once you have met the testing requirements, you may submit your license application.
License application forms are available online from the Arizona Registrar of Contractors website. The website also provides detailed information on bonding requirements for specialty contractors, which apply to all three categories of HVAC contractor licenses: residential, commercial, and dual.
For initial licenses, the required bond amount is based on the anticipated volume of work for the remainder of your current fiscal year:
- For commercial HVAC contractor licenses, the minimum required bond amount is $2,500 and the maximum is $50,000.
- For residential HVAC contractor licenses, the range is from $4,250 to $7,500.
- For dual licenses, the commercial and residential amounts are added together.
The bonding requirement can be met by either a cash bond or a surety bond, but most contractors prefer not to tie up a large amount of cash. The bond must be continuously in force to prevent license suspension.
Why is an Arizona HVAC License Bond Required?
The bonding requirement protects the state of Arizona and its residents against financial losses resulting from the unlawful or unethical actions of licensed HVAC contractors. The terms of the surety bond agreement obligate the contractor to operate in compliance with all applicable laws and statutes governing Arizona’s HVAC industry. Failure to do so gives a party that experiences a financial loss as a result of that failure the right to file a claim against the bond and be compensated for damages.
The surety bond agreement for an HVAC contractor bond is a legally binding contract involving three parties:
- The Arizona Registrar of Contractors is the “obligee”
- The HVAC contractor is the “principal”
- The bonding company authorizing the bond is the “surety”
How Are Arizona HVAC License Bond Claims Paid?
The terms of the surety bond agreement obligate the principal to pay all valid claims against an Arizona HVAC license bond. However, if the principal doesn’t make good on a valid claim promptly, the surety steps in and pays it on the principal’s behalf. So instead of owing the claimant, the principal owes the surety and is legally obligated to repay that debt.
How Much Does an Arizona HVAC License Bond Cost?
The annual premium is determined by multiplying the required bond amount established by the obligee by the premium rate set by the surety. The surety’s main concern is being reimbursed for any claims paid on behalf of the principal without having to take legal action against the principal. Consequently, the premium rate is based largely on the surety’s assessment of the principal’s creditworthiness, as measured by the principal’s credit score.
With good credit, the premium rate is likely to be in the standard market rate range of one to three percent.
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