Washington State Contractor Bonds
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 your Washington state contractor bond needs.
What Are They?
There are two broad categories of contractor bonds in the state of Washington: contractor license bonds and all other contractor bonds, including bid bonds, performance bonds, and payment bonds.
Washington State Contractor License Bonds
In the state of Washington, both general construction contractors and specialty contractors must be licensed at the state level by the Department of Labor and Industries, Contractor’s Registration Section. Certain counties and municipalities also have their own contractor licensing requirements. Purchasing a contractor license bond is a mandatory step in the licensing process for all contractors.
A Washington state contractor license bond is a contractor’s pledge to operate in accordance with applicable state laws and regulations governing the construction industry. It provides protection for project owners and consumers against financial loss resulting from a licensed contractor’s unlawful or unethical business practices and actions. It also protects the state against being held liable for having issued a license to a contractor who causes such losses.
Maintaining a current contractor license bond is essential to preventing license suspension or revocation.
Washington State Contractor Bonds
Public agencies and private project owners who hire general or specialty contractors to work on specific projects in the state may have additional bonding requirements to ensure that contractors do the following:
- Agree to accept a job if chosen through a competitive bidding process
- Purchase any additional bonds required as a condition of being awarded a contract (bid bonds)
- Complete the job in accordance with the terms of the contract (performance bonds)
- Pay their subcontractors, workers, and suppliers as specified in the project contract (payment bonds)
While these are the most commonly required Washington state contractor bond, there are also others.
Who Needs Them?
Every contractor seeking a new or renewal contractor license in the state of Washington must purchase a contractor license bond. The required bond amount (the bond’s penal sum) depends on the type of contractor’s license. For example, specialty contractor bonds have a penal sum of $6,000 while general contractor bonds must be in the amount of $12,000. Any contractor bond requirements other than related to licensing will be established by the specific project owner.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The terms of the legally binding surety bond agreement establish what laws and regulations the contractor must comply with to avoid potential claims against the bond. They also obligate the contractor to pay all valid claims. Typically, the surety bonding company (the “surety” for short) investigates to ensure that a claim is valid and may attempt to negotiate a settlement before paying the claim on behalf of the contractor. The contractor must, by law, reimburse the surety, but often may be allowed to do so in manageable installments.
What Do They Cost?
In agreeing to issue a Washington state contractor bond of any kind, the surety essentially is agreeing to extend the contractor credit up to the bond’s penal sum for the purpose of paying claims. There is always a risk that the surety will have to take legal measures to collect from the contractor. Consequently, the biggest factor in determining the premium rate a given contractor will pay is the contractor’s personal credit score. However, the surety bonding company will also consider the contractor’s business financial strength and industry experience.
Contractors with very good credit will typically be assigned a premium rate that’s in the range of 1% to 3%. Poor credit doesn’t make it impossible to obtain a Washington state contractor bond, but it does mean the premium rate will be much higher.
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Our surety bond professionals will get you the Washington state contractor bond you need at a competitive rate.