How much does a Utah contractors license bond cost?
There are three types of bonds for Utah contractors. Which kind of bond you obtain depends on the type of license you apply for. General building and general engineering contractors must obtain a $50,000 Utah contractors license bond. Residential and small commercial contractors must obtain a $25,000 bond, and everyone else must obtain a $15,000 bond.
Once you apply for one of the above bonds, the surety which you have applied with will determine the rate– or premium– which you need to pay to get your bond. The rate is always a small percentage of the total amount of the bond. If you need to get a $25,000 bond and are given a 1% quote by the surety, this means your bond premium is $250.
The exact percentage of your premium quote is determined by the surety on the basis of how reliable and secure it deems you as an applicant. It makes its determination on the basis of your personal credit score, financial statements, and other factors. Applicants with high credit scores (700 FICO or above) typically get quotes that range between 1% and 3%.
|Bond type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|General Building & General Engineering||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
|Residential & Small commercial||$25,000||$187,5||$187,5-$625||$625-$1,250||$1,250-$2,500|
|All other license types||$15,000||$112,5||$112,5-$375||$375-$750||$750-$1,500|
For more information regarding your bond’s cost, check out our detailed and extensive surety bond cost guide.
Options for applicants with bad credit
Even if you don’t have a high credit score, you can still get a Utah contractors license bond through our Bad Credit Program. We have designed this program to enable applicants to obtain their surety bonds just as easily as everybody else. The only difference is the slightly higher rates.
Rates under our bad credit program vary between 3% and 10%, depending on the applicant and their particular case.
What is the purpose of this bond?
Contractor license bonds are typically mandatory for contractors, because they serve the important function of guaranteeing protection and financial compensation to the state and the public. In Utah, these bonds are an agreement between the Utah Division of Occupational and Professional Licensing, the Utah contractor, and the surety bond company which issues the bond. They guarantee the contractor will comply with state statutes and the terms of the bond.
Should the contractor violate the terms of the bond or state statutes, a claim can be filed against their bond for the damages or losses the violation has caused. The surety will then pay compensation to the claimants up to the full amount of the bond. Should compensation be extended, the contractor has an obligation to fully repay the surety for its backing.
See the section below for a list of the terms of the Utah contractors license bond which contractors must comply with.
The Utah contractors license bond form specifies that claims against the bond can be made when a contractor:
- Has violated Utah Code Ann. Title 58, Chapters 1 and 55
- Fails to pay the obligations
- Fails to pay income taxes and self-employment taxes
How to apply for a Utah contractor license?
Becoming a licensed Utah contractor requires that you fulfill a number of prerequisites before applying for a license. These, along with the licensing requirements, are:
- Obtain the necessary knowledge and experience for licensure
- Pass a trade examination for the license type you will be applying for
- Pass the Utah laws and rules examination
- Complete a pre-license education course
- Register your business entity with the Utah Division of Corporations (if applicable)
- Obtain general liability insurance ($100,000 per incident and $300,000 aggregate)
- Obtain an Employer Identification Number (if applicable)
- Obtain a state withholding tax registration from the Utah State Tax Commission
- Obtain a Utah contractors license bond
- Complete a Utah contractor license application form
- Pay your application fee
For a detailed checklist of all the requirements, make sure to check the website of the Utah Division of Occupational and Professional Licensing, or to contact the Division directly.
Keep in mind that the Division will only accept original bond and insurance forms. You can also get digital copies via fax or email from us. Make sure to submit the bond form within 30 days after it has been signed by the surety.
To find out more about the Utah contractors license bond requirements, give us a call at (866)-450-3412!