- October 13, 2021
- Posted By:hmvreeland
In California, contractors are required to get a contractor license bond before they can obtain their license. In California, a contractor license bond protects a party that hired the principal against losses that may arise due to their failure to abide by the terms of the contract.
To help you make informed decisions, we have compiled a list of license bonding tips for your consideration.
Choose the Right Provider
It is important that you choose a knowledgeable, trustworthy provider. In other words, a bonding company that is known to put their clients’ best interests first. When considering a company, make sure they are licensed to provide bonds and authorized to do business in California.
Check their upper bonding limit and rating. If you primarily accept public construction jobs, look for a company with at least a B+ rating.
Remember, there is a certain rating requirement for certain jobs and levels of obligation. If you purchase a bond from a company with a low rating, your bond could be rejected and you might be forced to pay for a new bond.
Inquire about their policies regarding agreement default and references when looking for a company with an extensive understanding of your industry.
Hire an Agent
If you do not know much about contractor license bonds, it makes sense to speak with an agent. The professional will help you find the right provider with the best possible coverage. They will explain to you how a contractor license bond works and the requirements you need to fulfill in order to obtain one.
Perform your due diligence before choosing an agent. Join discussion forums to connect with other contractors who have recently purchased a contractor license bond or are planning to buy a bond.
Talk to contractors in your network who have secured a bond before. Ask them if they’d recommend their provider to someone they know. Look for an agent who only works with reputable bonding companies.
Open communication is key to building a long-term relationship with your bonding agent. Notify them about any problems with a construction project well in advance. Keep them updated on major changes such as ownership changes.
Prepare for a Pre-approval
Your provider will evaluate your financial health before issuing a bond. To ensure the process goes as smoothly and quickly as possible, keep important documents such as your financial statements handy. Your provider will also want to evaluate your business plan, continuity plan, organization structure, references, line of credit, and portfolio.
The more prepared you can be for the approval process, the faster and more efficient your experience will be. When working with a licensed contractor license bonding company in California, you should expect prompt, professional service and communication.
H.M. Vreeland is a renowned bonding company in California. Our experience and expertise give us a competitive edge as well as a reputation backed by over a century of service. To learn more, call (415) 573-3592.