Arizona Contractors License Bond
- Required by Arizona Registrar of Contractors
- Required of contractors who wish to obtain an Arizona contractors license
- Provides protection to the state and customers
- Guarantees financial compensation in cases of claims
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How much does an Arizona contractors license bond cost?
Arizona contractors must post an Arizona contractors license bond to the Arizona Registrar of Contractors. The amount of the bond varies depending on the license type and volume of work contractors perform. Bond amounts can range between $2,500 and $100,000, depending on these criteria. Have a look at the table below for a detailed guide to bond amounts and bond cost in Arizona.
The exact cost of your contractors license bond is a small percentage of the full amount of the bond. It is determined by your surety once you apply. Say you apply for a $15,000 bond and receive a 1% quote: your yearly bond premium will be $150.
What percentage the surety offers you depends on factors such as your credit score and your personal financial records. These are an indicator of the risk involved for the surety when providing the bond, and the likelihood of a bond claim. A good credit score, which will provide you with the lowest possible rate, is one of 700 FICO or above. Applicants with a high score can expect a percentage on their bond between 0.75%-2.5%.
| License Type | Expected annual gross volume of work | Surety Bond Amount | Above 700 | Between 650-699 | Between 600-649 | Below 599 |
|---|---|---|---|---|---|---|
| Residential General Contractor | Less than $750,000 | $9,000 | $100 - $135 | $100 - $225 | $225 - $450 | $450 - $900 |
| Over $750,000 | $15,000 | $112,5 - $225 | $150 - $375 | $150 - $375 | $750 - $1,500 | |
| Residential Specialty Contractors | Less than $375,000 | $4,250 | $100 | $100 | $106 - $212,5 | $212,5 - $425 |
| Over $375,000 | $7,500 | $100 - $112,5 | $100 - $187,5 | $187,5-$375 | $375-$750 | |
| Commercial General Contractors & General Engineering Contractors | $150,000 or less | $5,000 | $100 | $100 - $125 | $125-$250 | $250-$500 |
| Over $150,000 but less than $500,000 | $15,000 | $112,5 - $225 | $150 - $375 | $375-$750 | $750-$1,500 | |
| Over $500,000 but less than $1million | $25,000 | $187,5 - $375 | $250 - $625 | $625-$1,250 | $1,250-$2,500 | |
| Over $1M. but less than $5M. | $50,000 | $375 - $750 | $500 - $1,250 | $1,250-$2,500 | $2,500-$5,000 | |
| Over $5M. but less than $10M. | $75,000 | $562,5 - $1,125 | $750 - $1,875 | $1,875-$3,750 | $3,750-$75,000 | |
| $10M. or more | $100,000 | $750 - $1,500 | $1,000 - $2,500 | $2,500-$5,000 | $5,000-$10,000 | |
| Commercial Specialty Contractors | $150,000 or less | $2,500 | $100 | $100 | $100-$125 | $125-$250 |
| Over $150,000 but less than $500,000 | $7,000 | $100 | $100 - $175 | $175-$350 | $350-$700 | |
| Over $500,000 but less than $1M. | $17,500 | $130 - $262,5 | $175 - $437,5 | $437,5-$875 | $870-$1,750 | |
| Over $1M. but less than $5M. | $25,000 | $187,5 - $375 | $250 - $626 | $625-$1,250 | $1,250-$25,00 | |
| Over $5M. but less than $10M. | $37,500 | $281 - $562,5 | $375 - $937,5 | $937,5-$1,875 | $1,875-$3,750 | |
| $10M. or more | $50,000 | $375 - $750 | $500 - $1,250 | $1,250-$2,500 | $2,500-$5,00 |
For a more detailed explanation of your bond cost, plus tips on lowering your rate, have a look at our surety bond cost guide.
Other types of contractor license bonds in Arizona
In addition to obtaining a an Arizona contractors license bond, contractors may also be required to obtain a $200,000 surety bond to provide coverage for their assessment into the Arizona Registrar’s Residential Recovery Fund.
Options for applicants with bad credit
Applicants with a lower credit score can obtain a bond just as easily as those with higher scores. Our Bad Credit Program offers applicants a range of bonding options, regardless of their score. Bonds under this program are offered at a slightly higher rate: typically between 3% and 10%. Get in touch to find out how we can help you.
What is the purpose of this bond?
The purpose of contractor license bonds is to offer protection to the state and the public and their interests. They are obtained by the contractor to guarantee they follow the rules.
Contractor license bonds are an agreement between the Arizona contractor, the Arizona Registrar of Contractors, and the surety bond company which vouches for the contractor and provides the bond.
The bond specifies particular conditions which– if violated by the contractor– can lead to a claim against the bond. Under a surety bond claim, the surety company must extend financial compensation to claimants for any damages or losses they have incurred due to the violation of the conditions of the bond by the contractor. Once a surety extends compensation to a claimant, the contractor must repay the surety for its compensation entirely.
See below to find out what conditions the bond specifies and which contractors must comply with:
General and Specialty Contractors
The Arizona contractors license bond form requires contractors to comply with §32-1152 of the Arizona Revised Statutes (A.R.S.). The conditions set forth in §32-1152 specify the instances in which a claim can be filed against the Arizona contractor license bond. These include:
- Failure to pay any sum required pursuant to the above chapter of the A.R.S
- Failure to build or improve a structure in compliance with the applicable construction code
- Failure to pay for labor, materials or equipment provided
- Causing injury as described in §32-1131
How to apply for an Arizona contractor license?
There are many steps that an applicant must take to obtain an Arizona contractor license and the surety bond is just one of them. Here’s a brief overview of what contractors may need to cover in order to obtain their contractors license in Arizona:
- Pass required examinations
- Reserve a legal entity name
- Register legal entity at the Arizona Corporation Commission (if applicable)
- Obtain an Employer Identification Number
- Obtain Workers’ Compensation Insurance (if applicable)
- Obtain Arizona contractors license bond
- Complete and submit the application form along with supporting documents, which include:
- Examination scores
- Notarized experience forms detailing required amount of minimum experience
- Notarized project forms
- Completed financial statements (required for commercial, dual and swimming pool licenses)
- Copies of photo IDs of all persons applying for a license
- Copies of receipts for mandatory criminal background checks
- Copy of solar warranty (if applicable)
- Pay the relevant application and licensing fees
For more detailed information regarding the contractor licensing process, please contact the Arizona Registrar of Contractors.
Only original bond and insurance forms are accepted by the Registrar. If needed, we can also provide you with digital copies of your bond via email or fax. You’re required to submit the bond form to the state within 30 days of its issuance by the surety.
To find out more about the Arizona contractors license requirements, give us a call at (866)-450-3412. Our surety experts will be happy to provide you with assistance and advice.