Overview of Rhode Island Contractor License Bond Requirements
If you want to become licensed as an underground utility contractor in Rhode Island, you will need to submit a $20,000 contractor license bond in the process.
What is this bond for?
The RI Contractors' Registration and Licensing Board is the licensing authority for various contractors in the state. Underground utility contractors, in particular, must post a bond to the Board when applying for a license.
The bond's purpose is to guarantee their compliance with state regulations regarding their obligations and responsibilities as contractors. Moreover, the bond is also a form of protection to the public in instances where a contractor violates the bond agreement and causes losses or damages to one or more persons.
When this occurs, a claim can be filed against the bond to secure compensation. The surety that backs the bond, investigates the case and may extend compensation to claimants up to the full penal sum of the bond.
If you've never had to get bonded before, you probably have a lot of questions. See our detailed ‘What is a surety bond' guide for a full explanation of the bonding process!
See the sections below for more information about the cost of this bond, how to avoid bond claims, and how to get bonded.
If you'd rather speak to someone in person, call us at 866.450.3412 anytime!
How Much Does the Rhode Island Contractor License Bond Cost?
The cost of getting bonded is equal to a fraction of your $20,000 contractor license bond. The bond amount is the amount of security requested by the state and backed by the surety, whereas the bond cost is what you need to pay to get bonded.
The exact premium you need to pay is determined by the surety you apply with and depends on several factors.
How sureties determine your bond rate
Your bond rate is determined by the surety on the basis of several financial indicators. Your personal credit score is the most important factor. The higher your score - the lower the rate offered by the surety. Applicants with high scores, above 700, can expect to get bonded at a rate between 1% and 2% of the amount of their bond.
Apart from your credit score, your surety may also want to review your:
- Personal and business financial statements
- Owned assets and available liquidity
- Industry experience
To get a sense of how much your bond might cost, see the cost table below.
|Rhode Island Contractor License Bond Cost Based on Credit Score|
|Bond type||Bond amount||Credit Score|
|Above 700||650-699||600-649||Below 599|
|Underground utility license bond||$20,000||$200-$400||$300-$600||$400-$800||$600-$1,000|
If, instead, you'd like to get an estimate of your personal bond rate, try our bond calculator below!
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Can I get bonded with low credit?
Yes, even if your credit score currently is low, you can still get bonded. Applicants with lower scores are required to pay slightly higher rates on their bonds as a guarantee to sureties. Yet, you can improve your bond rate significantly by improving your credit score and financials over time.
See our Bad Credit Program page for more about getting bonded with low credit!
Why Do Bond Claims Occur?
The Rhode Island contractor license bond form states that the bond is for the benefit of anyone who suffers injuries or damages due to the actions of an underground utility contractor in performing work.
Any person who suffers such injuries or damages can consequently file a claim for compensation against the bond of the contractor. When a claim is filed, the surety will investigate it to determine whether it is legitimate. If the claim is indeed legitimate, the surety will extend compensation to the claimant which can be as high as the full amount of the bond.
When a claim is covered by the surety, the bonded contractor must then reimburse the surety in its entirety. This is a standard condition in every bond agreement. On the other hand, if the contractor never violates the agreement or has a bond claim filed against them, the only cost they must cover is their bond rate.
Apply For Your License Bond!
Get started with the application process by completing our bond application form. We will then get in touch with you to provide you with a free and accurate quote on your bond.
Any questions about getting this bond? Call us at 866.450.3412!