What You Should Know When It Comes To California Contractor Bonds

By Susan Garner

If you've decided to go into the construction business on the west coast, you will have to do more than just buy a pickup truck, a trailer, a ladder, and some tools. You have to be licensed, insured, and bonded. There will be forms to fill out, fees to be paid, and specific information needed by the licensing board. In order to have the correct coverage necessary, it's important to understand the different Los Angeles California Contractor Bonds and 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 is a way to ensure that everybody gets paid. That includes laborers working for you, subcontractors and suppliers. A qualifying individual bond can be required in cases where contractors in charge of projects have less than a ten percent interest in the company they work for.

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.

Good credit is important when you try to get a bond. A license bond is based on the credit of the small contractor. You will not be able to get a bid and performance bond if you have risky credit. This means that working on lucrative government jobs will not be an option for you until you have raised your credit score. Big companies with credit issues get bonds, if they can show strong financial reports and a stable history in the construction industry.

In order to get more information, and to get your licensing process started, you can go to the California State License Board website. You'll find all the forms you need. They have study guides that will help you pass your license test and explanations for the required paperwork. Once you have submitted your license forms, you can use this website to check the status of your application.

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