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What is an Electrical Contractor Bond?
Some states require electrical contractors to obtain an electrical contractor bond before they can perform work. These include: New Jersey, Minnesota, Arizona, Texas, Washington, Virginia, Illinois, Ohio, and Missouri among others. Without obtaining a bond in these states, electricians can’t get their electrical contractor license.
The electrical contractor surety bond guarantees that licensed and bonded electrical contractors will comply with state requirements and provisions for contractors. It protects the public and the state from contractors who act dishonestly, or are otherwise in violation of their requirements.
How do Electrical Contractor Bonds Work?
Electrical contractor bonds are like an agreement between the licensed contractor (the bond principal), the public and the state (the bond obligees), and the surety bond company which vouches for the contractor’s reliability. If a contractor violates state regulations, the state contractor licensing body or the contractor’s customers can file a claim against the bond.
If a claim is filed against a bond, the surety that issued the contractor license bond must investigate the claim. If the contractor is found to be in breach of regulations, the surety extends compensation to the claimant up to the full amount of the bond. Then the contractor must repay the surety for its backing of the claim.
Specific actions which constitute a claim are defined differently in the the statutes of each state requiring a bond for electrical contractors. Some states may define reasons for claims narrowly and require contractors to obtain additional bonds to cover other claims, while other states may include a variety of possible reasons for claims in the bond requirement.
Broadly defined, any damages, injuries or losses that result from the contractor’s breach of the conditions of their bond and state statutes are likely to qualify as conditions for a bond claim. This can include:
- Environmental and material damages caused by malpractice or carelessness
- Not using the right materials and causing damage due to carelessness
- Not remedying defects or restoring work to the necessary conditions when required to do so
- Not paying employees in due time for work they have performed
- Not paying for materials or not paying taxes
In case of any of the above violations, obligee– including customers, the state, workers and other affected parties– can file a claim against the bond and request compensation.
Electrical Contractor Bond Cost
The cost of your electrical contractor bond depends on your local bonding amount requirement. Different states have different electrical contractor bond requirements. Here are the electrical contractor bonding amounts in some states:
- New Jersey: $1,000
- Minnesota: $25,000
- Arizona: $2,500 - $50,000 (depends on the volume of work done)
- Washington: $4,000
- Ohio: $5,000 - $25,000
- Missouri (St. Louis): $10,000
- Virginia: $1,000
- Illinois: $5,000 - $20,000
- North Carolina: $50,000 - $130,000
Your surety bond cost is a percentage of your bond amount. That percentage is determined by your surety. If you have a good credit score and good financials, you’ll get a low rate on your bond, and a higher rate if your credit score is low.
With a high credit score, applicants can expect to a rate between 0.75%-2.5% of the total amount for their bond.
Not all agencies have access to the same rates. By choosing the right surety bond agency, you can also lower your cost. At Bryant Surety Bonds, we work with a number of the best and most professional sureties in the country– all of which are A-rated and T-listed companies.
These companies can provide our clients with some of the lowest possible rates, and are among the best in the nation in terms of their financial stability.
Bad Credit Bonds
For applicants who don’t have a good credit score, there’s good news: they too can get bonded.
Our Bad Credit Program opens the door to anyone who has less-than-perfect credit but still needs a bond.
Rates through this program are slightly higher due to the greater risk involved. Your exact cost will be determined upon application. The same sureties which provide all our other bonds also underwrite these, so you are sure to receive the best possible rate and the same strong backing.
How to Get Your Electrical Contractor Bond
To get your electrical contractor surety bond you simply need to fill in our online surety bond application.
You should also fill out the application if you just want a free bond quote. All our applicants receive a quote before getting their bond. Once you fill in the application, we will get in touch with you shortly.
To find out more about the electrical contractor bond requirements in different states, or why you need a bond and how to get it, call us at (866)-450-3412. Our surety experts will be happy to provide you with all the answers you need.