Information About Contractor’s License Bond

What is a Contractor’s License Bond?

              A contractor’s license bond is a surety pact for contractors. This helps the state and the public know that the contractor will follow state licensing regulations and all statutes. This protects the company and the public from contractors that does faulty or incomplete work.


To get a contractor’s license, you need to have a contractor’s license pact. If you are going to work for a government project, you need this in order to do the work. This protects the local, state, or federal government from losing money on a project due to a contractor’s faulty or incomplete work.

These bonds are important in every state and are necessary to protect the project. You will need a California contractor license bond to do any work in California. The same goes for almost every other state.

This article will help you to learn more about contractor’s permit pacts. It will give you some information about what they are and why they are necessary. You can also do some research on your own to find out more information.


Contractor’s License Pact

  1. Who is Required to Get One? In most states, it is mandatory for all permitted contractors to have a contractor’s license pact. This type helps to assure the public that all licensing regulations and statutes are being followed. This is another form of insurance that the contractor can provide for doing business.
  2. What is a Surety Pact? This is basically a three-way agreement that is between the Principal, the Obligee, and the Surety. It guarantees that the principal will follow all the regulations and statutes that go along with the bond and the industry. This helps the obligee to file a claim against the principal if the work is not up to standards.
  • The Principal – This is who should get the surety pact. They will follow all the regulations and statutes that are relevant to the surety bond. A contractor is the one that is required to get the surety bond for a contractor’s license pact.
  • The Obligee – This is the person that the principal has the obligation to provide services to. This is the person who can file a claim against the principal if the job is not done correctly. The obligee can also file a claim against the contractor’s license bond.
  • The Surety – This is the party that guarantees the work that the principal does. This is who the obligee will turn to if the contracting work is not done correctly. They will provide compensation for the obligee if they deem it necessary.
  1. Who Benefits from a License Bond? The obligee is the one that benefits from the pact initially. In reality, the whole industry benefits by having better work being done. The main beneficiary will go to the State License board, who is the obligee in cases where a permit pact is required.
  1. How Does a License Pact Work? If you are a contractor, you need to get a permit pact so that you can apply for your contractor’s license. You go to a company that can give these pacts and you can get one. This pact will guarantee that you will follow the guidelines, regulations, and statutes when doing your work.

If you don’t follow these guidelines, regulations, and statutes while you are doing your work, and this leads to damages to property or people, they can file a claim against you with the surety company that issued your pact. The surety company will investigate and see if you are liable for the damage. If you are, you could possibly lose your contractor’s permit.

  1. What Happens if a Claim is Filed Against a Bond? When the claim is filed against your pact, the surety company will investigate. If they find that you are at fault, they will require you to settle the claim. If you fail to do this, the surety company will settle it.

If the surety company settles the claim, they will still require you to pay it in the end. You won’t be able to get out of paying for the claim. You could lose your permit if you refuse to pay for whatever reason.

  1. Where Do You Get a Contractor Bond? You will go to a surety company or another agency that is licensed by your State Department of Insurance: There are insurance agencies that can provide these pacts that are permitted. They can do this quickly and easily if you just apply.


              A contractor’s license bond is necessary for contractors before they get their contracting license. This is necessary for them because it will add another form of insurance for their company. It will also help to make sure that the company will follow all regulations and statutes in the state.

You can get the bond from a surety company or other agencies that are licensed by the State Department of Insurance. If you fail to get a bond, you won’t be able to get your contracting license. You need this to be able to do contract work in your area.