Iowa Contractor License Bond

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  • Required from out-of-state contractors, and in-state contractors in some Iowa cities
  • Protects the state of Iowa and the public
  • Secures financial compensation to claimants
How to get bonded
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How much does an Iowa contractor license bond cost?

There are different bonding requirements for in-state and out-of-state contractors in Iowa. There is no unified requirement for in-state contractors to get bonded. Various cities and counties in the state require an Iowa contractor license bond from their contractors, and these bonds vary in their amounts. Out-of-state contractors are required to post a $25,000 contractor license bond.

An Iowa contractor license bond in the range of $5,000 to $10,000 is required by the following cities:

  • Johnston
  • Eldridge
  • Davenport
  • Bettendorf
  • Sioux City

The cost of obtaining your Iowa contractor license bond is determined upon applying for the bond. Your surety company will provide you with a quote on your bond, which is a small percentage of the full bond amount.

For Iowa in-state contractors that cost may be as little as $100. Out-of-state contractors can expect to pay as little as $250.

The cost of your bond mostly depends on your own personal credit score. Applicants with high credit scores– those that are above 700 FICO– typically get the lowest possible rates. Other factors such as personal finances and liquidity also play a part in determining your rate.

Options for applicants with bad credit

Applicants with lower credit scores are sometimes hesitant to apply for a bond. But applying for a bond with bad credit is no different than applying for a bond with regular or good credit.

Thanks to our Bad Credit Program, low-credit applicants can obtain their contractor license bond just as easily. The only thing that’s different in getting a bond through this program are the slightly higher rates. These higher rates are there in order to secure the surety against the higher risk involved in bonding these applicants.

For a quote and personalized advice, get in touch with our professionals through the Bad Credit Program page.

What is the purpose of this bond?

The purpose of Iowa contractor license bonds is to secure a legal agreement between contractors, the state and public of Iowa, and a surety bond company. That legal agreement is intended to protect the state and public of Iowa against contractors who violate contractor state laws and regulations, such as Chapter 91C of the Iowa Code or Chapter 875.150 of the Iowa Administrative Rules.

That’s why certain cities in Iowa require local contractors– and the state of Iowa requires all out-of-state contractors– to get bonded. By obtaining a bond, a contractor is basically being guaranteed by a surety company. If the contractor complies with all the conditions of the state law and conducts business honestly, then there is no cause for concern.

If a contractor violates state laws and causes damages and losses to the state or the public, then a claim can be filed against their bond. That claim may result in compensation being extended by the surety to claimants, up to the full amount of the bond. Since bonds function like a line of credit, rather than insurance, contractors who have had a claim on their bond must repay the surety for the compensation it extends.

Common reasons for claims against an Iowa contractor’s license bond are:

  • Violating the Iowa code and/or the Iowa administrative rules
  • The state or public suffering losses and damages because of contractor dishonesty or misconduct
  • Unpaid obligations to subcontractors, suppliers, and laborers, or unpaid taxes by contractors

How to apply for an Iowa contractor license

According to the Iowa Administrative Code, construction contractors in the state who make $2,000 a year or more from construction work are required to get licensed with the Iowa Division of Labor (DoL). On top of the DoL requirements for contractors, cities or counties across the state may have additional requirements that contractors need to comply with, such as an Iowa contractor license bond.

See below for some of the Iowa contractor license requirements you need to cover:

  • Complete the Contractor Registration Application/Renewal Form
  • Obtain a federal identification number (if the contractor is registered as a corporation)
  • Pay $50 annual registration fee
  • Provide workers’ compensation insurance if you have employees
  • An Iowa contractor license bond, if required by your city or
  • An $25,000 out-of-state Iowa contractor license bond posted to the DoL

Contact the DoL for further details concerning the Iowa contractor licensing process.

For more information regarding the Iowa contractor bonding requirement, call us at (866)-450-3412 anytime.