What is a Florida Contractor License Bond?
To become a licensed or registered construction contractor at the Florida Construction Industry Licensing Board, applicants must obtain a Florida contractor license bond.
This surety bond guarantees that Division I (building, residential and general) and Division II (all others) contractors will comply with the state statutes, regulations, and industry best practices.
Contractor license bonds provides protection to the state and individuals by offering legal recourse against contractors who violate the statutes and cause financial losses. In such a case, a claim can be filed against the bond and claimants may receive compensation once the case is investigated.
The claims process works because the surety bond is structured like a three-part agreement between the licensed contractor (the bond principal), the client and the state (the bond obligees), and the surety bond company which vouches for the contractor’s reliability by backing the bond financially.
When a claim against the contractor license bond is filed, the surety steps in to investigate. If it finds that the claimant has suffered damages and losses due to a contractor’s unlawful actions, it will extend compensation to claimants up to the full amount of the bond.
This does not relieve contractors of their obligations, because any claim that has been paid by the surety must be repaid by the bonded contractor. The best strategy is for contractors to always avoid claims, because of their potentially damaging effect to their reputation and finances.
Want to know how much Florida contractor license bonds cost? See below.
Florida Contractor License Bond Cost
Your surety bond cost is a percentage of the total bond amount.
Bond amounts for Florida contractor license bonds are $20,000 for Division I applicants and $10,000 for Division II applicants. Applicants can have their surety bond amounts reduced up to 50%, if they complete a financial responsibility course approved by the Licensing Board.
If those are the bond amounts, how much will your surety bond cost? The percentage, or rate, you will need to pay to obtain your bond depends on a number of financial indicators that sureties take into consideration. The most important one is your personal credit score. Secondary, but also important indicators are: your financial statements (business and private), your liquidity and asset profile and even your industry experience and record.
Applicants with a high credit score can expect to receive so-called standard market rates, which are between 0.75% - 2.5% of the full bond amount. So if you are required to obtain a Division I Florida contractor license bond, this would mean you would have to pay between $150 and $500 to obtain your bond.
Choosing the right agency can also make a difference in the rate you get. This is because different agencies work with different surety companies and have access to different markets and rates.
Bryant Surety Bonds works only with A-rated and T-listed companies. These companies have nationally-recognized credibility, as well as the financial capacity to back any bond. They provide us with some of the lowest rates on the market for our clients. By getting your bond here, you’re being served by them.
Bad Credit Bonds
Some contractors may find that certain sureties are unwilling to bond them because of their low credit score. With us, you can get bonded even if you have a low or nonexistent credit score.
We have created our Bad Credit Program in order to provide bad-credit applicants with the opportunity to get bonded. This allows you to become licensed as a contractor and take the necessary steps to improve your credit rating. This in turn will help you obtain a lower rate on your bond when you have to renew it.
Rates under this program are determined on an individual basis, but are generally higher, due to the increased risk. It’s our policy to always look for the best possible rates for all our clients, regardless of their credit score.
How to Get a Florida Contractors License
A number of requirements must be fulfilled before you can get your Florida contractors license. The most important requirement is a few years of experience in your field, or a few years of education in the same field. Up to three years of experience can be substituted with education.
For certain licenses you may also have to have additional experience. Make sure to check with the Licensing Board to obtain full information concerning the educational requirements for your license type.
Once you apply, you will also be required to:
- Pass a two- or three-part examination, depending on the license type you are choosing
- Obtain liability as well as property damage insurance– the amounts depend on your license type
- Submit a personal credit report
- Provide a criminal background check
- Pay an initial licensing fee
- Obtain your Florida contractor license bond
How to Get Your Florida Contractor License Bond
To apply for your contractors license bond in Florida, just submit our online surety bond application.
If instead, you’d just like to get a free quote on your bond, simply submit the application and we will contact you with your quote in a short amount of time.
Our experts are available for you to consult . If you’d like to speak to them concerning the bonding requirements for contractors in Florida just call us at (866)-450-3412.