What is an HVAC bond?

The HVAC bond (sometimes HVACR) is a type of contractor license bond required of contractors in some states, municipalities, and cities. It is required specifically of contractors who want to perform Heating, Ventilation, Air Conditioning, and Refrigeration work.

Why is this bond required?

This bond is a central licensing requirement for many HVAC contractors across the country. It guarantees that the bonded contractor will comply with their state or local laws in performing work legally as a contractor.

It also functions as financial security for the public and the state in instances that a contractor violates the laws that specify their obligations and responsibilities. In such instances, a claim can be filed against the bond to secure compensation for any damages or losses suffered by anyone as a result of such violations.

When a claim is filed, the surety will extend compensation to claimants which can be as high as the full amount of the bond obtained by the contractor.

If you have never gotten bonded before, see our detailed “What is a surety bond” guide for a complete explanation about how bonds work!

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See the sections below for more information about the cost of this bond, how bond claims occur, and how you can apply to get bonded.

If you prefer to speak to someone from our team about your particular bonding needs, call us at (866)-450-3412 anytime!

How Much Does the HVAC Bond Cost?

The cost of your bond is equal to a percentage of its full amount. The full amount of your bond will differ depending on your state or county regulations.

For example, applicants for an HVAC license in Alabama need to post a $15,000 bond, whereas applicants in Cleveland, Ohio need to post a $25,000 bond.

How is bond cost determined?

The cost of your bond is determined by the surety that issues your bond. The surety considers several financial criteria prior to offering you a premium. The most important factor that influences your bond premium is your personal credit score.

In addition to your credit score, sureties may also consider your:

  • Personal financial statements
  • Business financial statements
  • Fixed and liquid assets
  • Work experience

Applicants who demonstrate a high credit score of 700 or more will typically be offered a rate between 1% and 4% of the amount of their bond.

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What if I have a low credit score?

Rates for applicants with low credit scores are typically higher than for those with higher scores. This is because sureties assume greater risk in issuing bonds to applicants with lower scores. Yet, you can significantly reduce your bond premium by improving your credit score and other financials over time.

Learn more about getting bonded with a lower score at our Bad Credit Program page.

What Can Give Rise to a Claim Against the HVAC Bond?

A claim can be filed against a bond when the bonded party, the HVAC contractor, violates the conditions of the bond. Most bonds require that the bonded party will comply with certain legal provisions. These can be particular sections of the state law, or even specific obligations and/or responsibilities.

A bond claim can arise in any case in which these conditions have been violated, and this has caused losses or damages to anyone the contractor has performed work for. Sometimes, a claim may also be brought up by the state in the defense of the public.

When a claim is filed against a bond, the surety which has issued the bond will investigate the claim. If the claim is legitimate, the surety will typically extend compensation to the claimant in order to cover their losses. Such compensation may be as high as the full amount of the bond.

Once the surety has resolved the claim, the bonded HVAC contractor is required to reimburse it in full. This is part of the conditions of every bond agreement; that the bonded party is ultimately liable for any claims filed against the bond.

If, on the other hand, the bonded contractor does not violate the bond agreement, they only need to pay the bond premium which is only a small fraction of the full amount. For this reason, it is best to avoid giving rise to any claims.

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Start your bond application by completing our simple online form!

We will shortly get in touch with you to provide you with a free and precise quote on your bond, along with all other details regarding the bonding process.

To speak to one of our bonding professionals about the HVAC bonding requirements in your state, call us at (866) 450-3412!

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About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.