What Is a Home Improvement Bond?

To become licensed and work on contracts, home improvement contractors in a number of states need to obtain a home improvement bond. States that have a surety bond licensing requirement for home improvement contractors include: Maryland, Tennessee, New York, Ohio, Texas, as well as Washington, D.C. In some states only certain municipalities require a bond, while in others, this is a statewide requirement.

The home improvement surety bond provides a guarantee to the contractor’s customers that the contractor will comply with state laws and regulations when performing work. It also guarantees to the state contractor licensing department that the contractor has fulfilled the necessary licensing requirements, and has financial backing in the case they violate state statutes.

How Do Home Improvement Bonds Work?

The home improvement contractor bond is an agreement made between the contractor (the bond principal), the state contractor licensing department (the bond obligee), and the surety bond company. By providing a bond to the contractor, the surety guarantees their accountability in front of the obligee and extends its financial backing.

If the contractor is found to be in breach of state statutes, the state department or customers can file a claim against the bond to request compensation. The surety then has to investigate the case and compensate claimants. Due to the nature of the agreement, the contractor must then compensate, or indemnify, the surety for the amount of compensation it has extended to claimants.

Home Improvement Bond Cost

Your surety bond cost is a fraction of the amount of your bond. Bond amounts vary by states or counties, so you should always check with your local licensing department concerning the exact amount of your bond. Here are some examples of home improvement bond amounts across a number of states:

  • Ohio: $25,000
  • Maryland: $20,000
  • Tennessee: $10,000
  • Washington, DC: $25,000
  • New York: $20,000

Your surety determines your rate on the basis of the bond amount. It takes into account your personal credit score and other financial indicators. Applicants with a high credit score typically are offered a rate between 0.75%-2.5% of the full bond amount.

Apart from improving your credit score and financials, you can influence your bond cost by carefully picking your surety bond agency. Agencies have access to different markets, so your choice determines the options you are given.

Bryant Surety Bonds works only with A-rated and T-listed surety bond companies. These companies are capable of providing us and our clients with exclusive rates. At the same time, these companies are among the most secure and reliable in the whole industry.

Bad Credit Bonds

Don’t despair if you have a low credit score. With us you can get bonded easily, despite credit problems.

Our Bad Credit Program enables applicants with lower scores to obtain their surety bonds, though at slightly higher rates.

Bonds under this program are provided by the same expert sureties that bond all our other applicants. We always look for the best possible options, regardless of our applicants’ credit status.

How to Get a Home Improvement Contractor License

Requirements for home improvement contractor licenses vary across states, though you will typically be asked to provide some or all of the following:

  • A completed home improvement contractor license application
  • A home improvement bond in the required amount
  • Proof of workers’ compensation and general liability insurance
  • Proof of previous experience and/or education
  • Passing of contractor license exam
  • Payment of licensing application fee
  • Sales tax ID number
  • Criminal background check information

Make sure to check with your local licensing department for full information regarding your home improvement contractor license.

How to Get Your Home Improvement Bond

To apply for your home improvement surety bond or simply to get a free bond quote, fill in our online surety bond application.

Once we process your application we will get in touch with you immediately with your quote and suggestions for further steps, if you wish to get bonded.

Get in touch with us at (866)-450-3412 to speak to our surety professionals. They will be able to tell you more about the bonding requirements in your state, as well as answer all other surety bond related questions. Don’t hesitate to call!