How much does an Indiana contractor license bond cost?
The state of Indiana does not have a statewide contractor license bond requirement. Instead, specific areas in the state require local licensing, and a licensing bond as part of that.
There are roughly three types of Indiana contractor license bonds, based on their amounts: a $20,000, $10,000, and $5,000 bond. Most contractor license bonds required in the state of Indiana fall within these three categories.
|State and Bond Name||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
The exact cost of your Indiana contractor license bond is something that your surety will determine when you apply for the bond. Sureties consider an applicant’s financial profile before issuing a quote.
Among others, personal credit score is the most important factor. Applicants with a high credit score, one of 700 FICO or more, are considered the lowest risk. These applicants typically get the lowest rates.
Options for applicants with bad credit
Thanks to our Bad Credit Program, getting a bond with a low credit score is just as easy as getting a bond with a high score. The only difference between those two is that bonds for applicants with lower scores are issued at slightly higher rates, due to the higher risk involved.
By applying here, contractors with lower scores can get bonded and will have a chance to do business in Indiana. And in doing business, they can improve their credit score and get a better rate next time they apply.
Rates under this program are determined on a case-by-case basis. To find out how much your bond will cost under this program, get in touch with us through the Bad Credit Program page.
What is the purpose of this bond?
The purpose of a contractor license bond is to provide protection to the state and public where a contractor operates. By obtaining an Indiana contractor license bond, a contractor is providing security to the state and the public, because the bond is a legal agreement.
The conditions of the bond are that a contractor must comply with the state rules and regulations for contractors, such as the Indiana Administrative Code (IAC). The bond further requires contractors to operate in an honest and truthful manner and not cause damages or losses either to the state or the public.
By obtaining a bond, the contractor agrees to comply with its conditions. If an Indiana contractor fails to do so, and causes damages or losses, a claim can be filed against their bond. When a claim is filed, the surety backing the bond will investigate the case, and may pay out compensation to claimants up to the full bond amount.
The contractor must then follow up on their bond obligations and repay the surety for its backing. If the contractor complies with all conditions of the bond and avoids claims, then they won’t incur any costs except the initial cost of obtaining the bond.
Common causes for claims against an Indiana contractor license bond include:
- Violating the Indiana Administrative Code
- A contractor performing their work in an dishonest way and causing damages or losses
- A contractor not paying their subcontractors, suppliers, and laborers for work they have provided
- Not paying taxes and fees to the state of Indiana
How to apply for an Indiana contractor license
Indiana contractor license requirements may differ from city to city and county to county, but all contractors must file an initial application with the Secretary of State. Getting registered at the Department of Revenue is also necessary as well as the Department of Workforce Development if you have employees.
Apart from that, contractors must comply with the local licensing requirements of their licensing bodies. These requirements may, among other things, include the following:
- Complete a local Indiana contractor license application
- Obtain General Liability and Workers’ Compensation Insurance
- Get an Indiana contractor license surety bond (in the amount required by the local licensing body)
- Complete a criminal history record form or pass a criminal background check
- Provide letters of reference
- Pay a licensing and/or application fee (Indianapolis requires a $247 licensing fee)
Make sure to contact your local licensing board for more information regarding the licensing process as an Indiana contractor.
If you have any questions regarding the process of obtaining your Indiana contractor license bond, get in touch with us at (866)-450-3412 anytime.