Overview of Louisville, Kentucky Contractor License Bond Requirements
Applicants for a wrecking contractor license in Louisville, Kentucky must obtain a contractor license bond in order to get licensed.
Applicants for an “A" type of license must post a $10,000 bond, whereas applicants for a “B" type of license must post a $25,000 bond.
Why is this bond required?
This bond serves as a guarantee that a licensed and bonded wrecking contractor will comply with the local and state laws that govern their line of work.
If such a contractor violates the law and thereby causes any damages or losses, a claim can be filed against their bond to request compensation. The surety that backs the bond will then investigate the violation to determine whether to extend compensation and in what amount. Potentially, the amount of compensation can be as much as the full penal sum of the bond.
For a more detailed explanation of how surety bonds work, see our ‘What is a surety bond' guide!
In the sections below you can find out more about the cost of this bond, how bond claims work, and how you can apply for your bond!
If you have any bond-related questions you'd like to raise personally with us, call us at 866.450.3412 anytime!
How Much Does it Cost to Get a Contractor License Bond in Louisville, Kentucky?
The cost of your bond is equal to a part of the full amount of your bond. It is determined by the surety when you apply for your bond on the basis of several financial factors.
Factors that determine your bond rate
Applicants' personal credit score is the primary factor that sureties consider when determining your bond rate. If you have a high credit score, you will be eligible to get bonded at some of the lowest possible rates.
Usually, applicants with high to good scores are offered a rate on their bond between 1% and 3% of the bond amount.
Applicants with low to bad scores can instead expect to get bonded at a rate between 3% and 5%. Rates for such applicants are higher because sureties require greater security when issuing bonds under such conditions. Once you improve your credit score, you can expect to get a lower rate.
In addition to your credit score, the surety may also want to review your:
- Personal and business financial statements
- Fixed and liquid assets
- Industry experience
Curious how much your bond might cost? See the table below for an estimate of your premium based on your credit score.
|Kentucky Contractor License Bond Cost Based on Credit Score|
|Above 700||650-699||600-649||Below 599|
How Do Bond Claims Occur?
Contractor license bonds function like agreements between the contractor, the state or city that requires the bond, and the surety. Under the conditions of the bond agreement, the contractor is required to comply with state laws and regulations that regulate their type of work.
If a contractor violates the conditions of their bond agreement and causes damages or losses to anyone in doing so, a claim can be filed against their bond. The purpose of the claim is to request that either the contractor or the surety that backs their bond extend compensation to cover for such damages.
Usually, the surety that backs the bond will then step in to assess the claim and determine its validity and the amount of required compensation. It will then extend compensation to claimants which, depending on the nature of the loss, may even be as high as the full amount of the bond issued to the contractor.
Even when claimants are compensated, the claims process is not yet finished. Under the bond agreement, the contractor is required to repay the surety in full for any compensation it extends. If, instead, a contractor does not violate their bond agreement, then the only cost associated with the bond that they have is their bond premium.
Get Your Contractor License Bond Here!
To apply for your bond, complete our simple application form by clicking on the banner below.
We'll then get in touch with you to provide you with a free quote on your bond, along with more details about how to complete the application process.
If you have any additional questions about the bonds for wrecking or other contractors in Kentucky, call our bond experts at 866.450.3412!