For several types of contractors, a contractor license bond is an important part of operating legally and ethically in the state of Arizona. This guide will explain what a contractor license bond is, who requires one and some of the specific bond amount requirements for different types of contractor licenses.
What Is an Arizona Contractor Bond and Who Requires It?
A contractor license bond is a type of contract bond. It is a guarantee to the public and the state, and the contractor buys the bond from a surety company. It shows that the contractor is committed to conducting work in accordance with state laws and regulations. What is a surety bond? This is a bond that helps to protect people from fraudulent or illegal business practices by professionals or service providers who must be licensed. Contractors in Arizona are required to be licensed. Showing proof of a bond is one of the licensing requirements a contractor must fulfill before receiving approval.
All types of general and specialty residential contractors in Arizona must be bonded. According to the state government's definitions, residential contractors are those who repair, remove, add to, build or alter residential structures in construction projects. Also, general and specialty commercial contractors who perform similar tasks on commercial structures must be bonded. Certain types of specialty and general engineering contractors who work on fixed works, parks, roads, tunnels and other structures that are not homes or businesses must also obtain licenses and bonds.
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How Much Does an Arizona Contractors License Bond Cost?
To get bonded, you must pay a bond premium. The premium is equal to a percentage of the total bond amount and is determined by the personal credit score.
Applicants with a high credit score (700+ FICO) can usually get bonded at a rate of 1% of the total bond amount. To get a $15,000 bond at this rate, you would need to pay a $150 premium.
Want to know how much your bond might cost? See the table below for an estimate!
|Arizona Contractor License Bond Cost|
|License Type||Expected annual gross volume of work||Surety Bond Amount||Surety Bond Cost by Credit Score|
|Above 700||650-699||600-649||Below 599|
|Residential General Contractor||Less than $750,000||$9,000||$100 - $135||$100 - $225||$225 - $450||$450 - $900|
|Over $750,000||$15,000||$112,5 - $225||$150 - $375||$375 - $750||$750 - $1,500|
|Residential Specialty Contractors||Over $375,000||$4,250||$100||$100||$106 - $212,5||$212,5 - $425|
|Over $375,000||$7,500||$100 - $112,5||$100 - $187,5||$187,5-$375||$375-$750|
|Commercial General Contractors & General Engineering Contractors||$150,000 or less||$5,000||$100||$100 - $125||$125-$250||$250-$500|
|Over $150,000 but less than $500,000||$15,000||$112,5 - $225||$150 - $375||$375-$750||$750-$1,500|
|Over $500,000 but less than $1 million||$25,000||$187,5 - $375||$250 - $626||$625-$1,250||$1,250-$25,00|
|Over $1 million but less than $5 million||$50,000||$375 - $750||$500 - $1,250||$1,250-$2,500||$2,500-$5,00|
|Over $5 million but less than $10 million||$75,000||$562,5 - $1,125||$750 - $1,875||$1,875-$3,750||$3,750-$75,00|
|$10 million or more||$100,000||$750 - $1,500||$1,000 - $2,500||$2500-$5000||$5000-$10,000|
|Commercial Specialty Contractors||$150,000 or less||$2,500||$100||$100||$100-$125||$125-$250|
|Over $150,000 but less than $500,000||$7,000||$100||$100 - $175||$175-$350||$350-$700|
|Over $500,000 but less than $1 million||$17,500||$130 - $262,5||$175 - $437,5||$437,5-$875||$870-$1,750|
|Over $1 million but less than $5 million||$25,000||$187,5 - $375||$250 - $626||$625-$1,250||$1,250-$25,00|
|Over $5 million but less than $10 million||$37,500||$281 - $562,5||$375 - $937,5||$937,5-$1,875||$1,875-$3,750|
|$10 million or more||$50,000||$375 - $750||$500 - $1,250||$1,250-$2,500||$2,500-$5,000|
Several other financial factors also influence the cost of your bond. These include your:
- Personal and business financial statements
- Fixed and liquid assets
- Work experience and record
To improve your bond cost, you should focus on increasing your credit score as well as improving these additional financial indicators.
Want to know more about how bond rates are determined by sureties? See our detailed surety bond cost guide!
Residential and Commercial Contractors
Regardless of the type of license applied for, all contractors in Arizona are required to obtain a bond under Arizona Revised Statutes (A.R.S.) §32-1152.
The purpose of this bond is to guarantee that licensed contractors will pay any sum required pursuant to this chapter. Payments may be required on claims against the contractor for:
- Failure to build or improve a structure in compliance with the applicable construction code
- Failure to pay for labor, materials, or equipment provided
- Causing injury as described in §32-1131
Licenses and bonds for contractors are issued for a period of two years. Renewal must be completed before the renewal date of the license to avoid its expiration.
Arizona Contractors License Bond Requirements
Bonds for these contractors vary in their amount depending on the contemplated gross volume of work per year. These are:
- Residential general contractors in the state must post a bond in the amount of $9,000 or $15,000.
- Residential specialty contractors are required to post a bond in the amount of $4,250 or $7,500.
- Commercial general contractors in Arizona must post a bond in a range between $5,000 and $100,000.
- Commercial specialty contractors are required to post a bond in a range between $2,500 and $50,000.
Contractors in Arizona are required to obtain one of these bonds when applying for a license. For a detailed breakdown of the specific bond amounts required of contractors in Arizona, see the table in the section below.
Bryant Surety Bonds can provide contractors with some of the lowest rates available in the state. To get a free quote on your bond, complete the online application form, and we will shortly get in contact with you.
Are you looking to obtain a contract bond in Arizona? See our contract bonds page for more information about the contract bonds offered by Bryant Surety Bonds!
Types of Contractors and Their Bond Requirements
The state's license bond amount requirements vary based on license type and completed gross annual revenue. Arizona contractor licenses are good for two years. The bond amount is what it is worth if someone makes a surety bond claim. The bond amount is not the same as a bond premium, which is the bond cost to the person obtaining it. Paying for a bond is similar to the idea of paying an insurance company that is underwriting coverage up to a certain amount. There is a premium for the coverage that must be paid periodically to keep it active. \
Bond premiums vary based on bond type, personal credit score and other factors. For instance, someone with bad credit may obtain a bond but pay more than someone with excellent credit. A bond agency can provide a free quote. The Arizona Registrar of Contractors provides lists of bond amount requirements. These are some of the common types of contractors in Arizona and their bond requirements.
General and Specialty Contractors
The main general contracting license is a B license, and a general commercial contractor must obtain a B-1 license. There is also a general dual license for contractors who want to work in both residential and commercial settings, and that is the KB-1 license. Alternately, there is a KB-2 license for dual residential and small commercial construction. There are also several specialty, specialty dual and engineering contractor licenses. Specific ones will be covered in upcoming sections.
For residential general contractors, the bond is $9,000 if the annual gross volume of work is under $750,000. If the volume exceeds that amount, the bond amount jumps to $15,000. If residential specialty contractors complete less than $375,000 in gross volume, they must pay a bonding company $4,250 for a bond. They must pay $7,500 if their gross volume exceeds $375,000.
There are more bond price tiers for commercial contractors in Arizona. These are the bond amounts for commercial general contractors and engineering contractors:
- The bond is $5,000 for volume less than $150,000.
- The bond is $15,000 for volume more than $150,000 but less than $500,000.
- The bond is $25,000 for volume exceeding $500,000 but less than $1 million.
- The bond is $75,000 for volume over $1 million but under $5 million.
- The bond is $100,000 for volume exceeding $10 million.
For commercial specialty contractors in the construction industry, these are the Arizona bond amounts based on volume:
- The bond is $2,500 for volume under $150,000.
- The bond is $7,000 for volume over $150,000 but less than $500,000.
- The bond is $17,500 for volume exceeding $500,000 but under $1 million.
- The bond is $25,000 for volume more than $1 million but less than $5 million.
- The bond is $37,500 for volume over $5 million but under $10 million.
- The bond is $50,000 for volume exceeding $10 million.
When it comes to calculating Arizona contractor license bond amounts for either specialty or general contractors with a dual license, the amounts for residential and commercial specialty or general license bonds are combined based on gross volume.
The electrical contractor bond amount depends on license classification. The state classifies electrical contractors as specialty contractors. There are different classifications of licenses in Arizona. For example, the R-11 contractor license is for residential electrical work. The required bond amount for the R-11 for two years is $4,250. Commercial electrical contractors must obtain a C-11 license with a $2,500 surety bond. For the CR-11 license, which is a dual residential and commercial license, the bond amount is $6,750. In electrical engineering applications, the A-17 license is required. The bond amount for this license is $5,000.
Telecommunications contractors obtain a license that allows them to repair, service or install phone, alarm, sound, video or other low-voltage communication systems. They are considered specialty contractors. The R-67 license is required for doing these tasks in residential settings, and the bond amount is $4,250. With the C-67 license, which is for commercial applications, the bond amount is $2,500. For the dual CR-67 license, the bond requirement is $6,750.
Fire Protection Sprinkler System Contractors
Contractors who install, repair or alter fire protection systems are specialty contractors. They may work with systems that use chemicals, gas, steam or water. Supportive activities necessary for a fire protection system work like backfilling, trenching and excavation are included in this license. However, fire protection contractors must work with electrical subcontractors for electrical work or wiring. For residential applications, the R-16 license is required. The corresponding bond amount is $4,250. A C-16 license is required for commercial fire protection applications, and the bond amount is $2,500. For a dual license, the CR-16, the bond amount is $6,750.
Farm Labor Contractors
Farm labor contractor bonds protect employees of farm contractors to ensure they will receive adequate wages if employers do not follow labor standards. In addition to being required by the federal Department of Labor, they can be required by some states. Farm labor contractor bonds at the federal level vary based on the number of employees:
- For those with fewer than 25 employees, the bond amount is $5,000.
- For those with 25 to 49 employees, the bond amount is $10,000.
- For those with 50 to 74 employees, the bond amount is $20,000.
- For those with 75 to 99 employees, the bond amount is $50,000.
- For those with more than 100 employees, the bond amount is $75,000.
The H2A labor contract application must be filed for this type of bond. The DOL's Wage and Hour Division Administrator can provide additional guidance.
Painting contractors are considered specialty contractors in Arizona. They are allowed to repair or apply paint, texturing, wall coverings and liquid floor coverings. The R-34 license is for residential painting applications and requires a bond of $4,250. For commercial painting applications, a C-34 license is required, and the bond amount is $2,500. The bond amount for a dual CR-34 license is $6,750.
To provide a variety of HVAC services in Arizona, contractors need the correct license and HVAC bond. Some licenses are available for specific related applications like sheet metal for ductwork. The Comfort Heating, Ventilating and Evaporative Cooling license allows a contractor to repair, alter or install gas-fired furnaces, warm air heating systems, evaporative cooling and ventilation systems. For a commercial C-58 license, the bond is $2,500. The bond is $6,750 for the combined CR-58 license. With this classification, there is no R-58. Instead, the combined license includes the R-39R license, which is the Residential Air Conditioning and Refrigeration license. Its bond is $4,250. There are also similar licenses that include solar applications. Also, there are other licenses for contractors who work on boilers.
Carpenters who are licensed in Arizona with the ROC can perform millwork, finish carpentry and rough carpentry. They can work with metal doors, windows and studs. For a residential R-7 license, the bond amount is $4,250. It is $2,500 for a commercial C-7 license, and the dual CR-7 license has a bond amount of $6,750.
In Arizona, licensed drywall contractors can repair or install certain approved wall partitions, tape and texture for wall boards, ceiling grid systems, movable partitions and gypsum wall board. For residential applications, the R-10 license is required. Its bond requirement is $4,250. The bond for the commercial C-10 license is $2,500, and the dual CR-10 license bond is $6,750.
Arizona steelworker contractor licenses come in a few variations. The R-17 Steel and Aluminum Erection license is for residential steelwork. It applies to architectural aluminum and steel to include cutting, erecting, assembly, field layout and more. The CR-17 license is for commercial and residential purposes. For the R-17 license, the bond is $4,250. It is $6,750 for the CR-17. The A-11 Steel and Aluminum Erection license is a form of engineering contractor license. It allows similar tasks outlined for the R-17 and CR-17 licenses with engineering applications. For the A-11 license, the required bond is $5,000.
Floor Laying Contractors
In Arizona, contractors who want to lay floors are considered specialty contractors. While those who have a Finish Carpentry license can lay only wood floors, the Floor Covering license allows for more flexibility. Contractors with this license can lay vinyl, asphalt, wood, tile, linoleum, carpet, rubber and concrete coatings. For residential applications, the R-8 license is needed. The required bond for that license is $4,250. With commercial applications, contractors need the C-8 license, which has a bond requirement of $2,500. The combined CR-8 license has a required bond of $6,750.
Sewer and Sewer Service Contractors
A Sewers, Drains and Pipe Laying license is needed in Arizona for sewer service contractors. There are a few different options. Sewer engineers and commercial contractors need the A-12 license, which has a bond of $5,000. Commercial contractors with this license can lay pipes for storm drains, work with gas or water lines, set up irrigation and create sewer access holes. They can connect sewer collector lines to buildings and install necessary fixtures.
The R-37R license is for residential plumbing services, and its scope is limited to residential applications. There is also a combined residential and commercial sewer contractor license. This is the CR-80, which has a bond of $6,750. This license combines most of the allowances of the A-12 and R-37R licenses.
Arizona Contractor Licensing Requirements
To get licensed as a commercial or residential contractor in Arizona, you must comply with the licensing requirements of the Registrar of Contractors. These include the following:
- Form a legal entity with the Arizona Secretary of State
- Identify a qualifying party for your license that meets the license classification experience and examination requirements
- Submit background checks for the applicant and the qualifying party
- Obtain an Arizona contractor license bond in the right amount
- Provide Workers’ Compensation Insurance (if applicable)
- Pay a licensing fee
- Complete and submit a contractor license application form
If you have any questions about the licensing process for contractors in the state, contact your local ROC representative.
Renewal Process of Arizona Contractor License Bond
In the construction industry, all general and specialty contractors must renew a state license. To remain a licensed contractor, it is important to complete the renewal process before the deadline. However, the process to maintain a bond involves keeping up with the premiums. If a bond is nearing expiration, the issuer will send reminders months in advance, with renewal instructions. This usually involves filling out a simple form and submitting a payment. According to the state's rules, bonds must be continuous. If a surety bond provider cancels a bond, it must notify the holder of the bond and the Arizona ROC at least 30 days before canceling it. If that happens, it is important to obtain another bond immediately. Failing to do so can lead to license suspension.
If a contractor's work volume increases significantly enough to reach a new bond requirement, it is important to increase the bond amount. A simple call to the surety company is the first step for a new bond quote. Contractors must also renew their licenses as required by the state and pay the required renewal fees. The contractor must submit the appropriate renewal license application to the ROC. Contractor licenses are valid for two years after renewal. Fees for licenses are set by Arizona Revised Statutes Section 32-1126, A.R.S. Section 32-1126(G) and R4-9-130. The fee amounts vary based on license classification.
To simplify the renewal process, the ROC provides a checklist with the following steps to take to submit an online application:
- LLC and INC businesses that were registered through the Secretary of State must ensure they are active and in good standing with the Arizona Corporation Commission.
- A contractor must verify that the bond is active and meets the required annual gross volume amount.
- Businesses with employees must provide a workers' compensation policy number, and those without employees must select the right exemption.
For convenience, applicants should use the ROC online portal to access the application to renew. These are the renewal steps to follow after logging in:
- Choose the "Keep License Up-to-Date" option, and click the "Action" button.
- From the drop-down menu, select the "Renew License" option.
- Follow the easy prompts, and have a payment method ready to pay the required license fees.
License renewals are typically approved automatically, and they are manually reviewed later to ensure that the qualifying bond is active and meets the amount requirement based on gross work volume. No background check is required when submitting a renewal contractor license application.