What You Need To Know About California Contractor Bonds

By Clarence Ryder

Going into the construction business involves a lot more than a set of tools, a truck and trailer, and a tall ladder. It also requires licenses, insurance and bonds. The proper forms and applications must be filled out. There are fees to be paid and specific paperwork to submit to the licensing board. You may need more than one bond depending on the jobs you are doing. In order to know which Los Angeles Contractor Bonds you'll need, you have to understand what they cover.

You have to get a license bond before you can do any work for the public in the state of California. This bond is protection for customers in case you don't perform the work in a reputable manner. The bond gives the public recourse if they are faced with defective or shoddy workmanship.

A license bond ensures your laborers get paid. It is not protection for you or your company in any way. Contractors without any ownership in the companies they work for may be required to get a qualifying individual bond if they are overseeing construction projects.

A fidelity bond will protect your customers in the event one of your workers steals something from them while they are working on a project. A fidelity bond will cover all kinds of dishonest acts by employees and relieves you of the responsibility of repayment or replacement. Employee dishonesty bonds are protection for you and your company in case a worker steals something from you.

If you plan to bid on local, state, or federal government contracts, you will most likely be required to purchase a surety bond. This is a form of insurance for the government agency awarding contracts. If you don't perform, the government will file a claim against you as the beneficiary of the bond.

You will be responsible for satisfying any and all claims and pay any legal fees incurred because of them. As part of the surety bond you will be required to sign an indemnity agreement. This is your promise to repay, both corporately and personally, any money the surety actually had to pay on your behalf.

You may encounter problems getting a license and a bond if you have poor credit. The license bond you apply for will be based on your personal credit. Contractors with low credit score won't be able to get a bid and performance bond. That means they can't work on governments contracts. It is possible for big contracting companies to get bonds even with credit issues. They have to show strong financial resources and have a reputable history in the industry.

You can get all the information you need, and get the licensing process started. By going to the California State License Board online site. You can download the necessary forms there. The site offers study guides to help contractors pass the state examination. After you have sent in your application, you can track its status on the website.

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