As a huge and prosperous state with a growing population, California sees more than its fair share of construction. In order to protect residents from unscrupulous or unskilled contractors, the state has a blanket requirement for bonding for any individual using a contractor’s license.
The bottom line figure on the California contractor licensing bond is that a $12,500 bond is a legal requirement to do business as a contractor. Although this may seem surprisingly small when considered next to a construction budget, it’s important to note that the licensing bond is only a “blanket” bond covering all aspects of a contractor’s professional behavior. Individual jobs may require much larger bonds to protect against defective work.
In California this is particularly important for contractors who work on public projects (i.e. for the government). Much larger performance bonds (as well as other specialized types) are typically required by federal, state, and local agencies when they hire construction professionals.
On jobs for private clients, contractors may be required by their contract to post a performance bond. This is frequently seen on large-scale commercial projects with carefully-structured contracts. California is home to enough luxury homes to require bonding(contractors insurance) on many residential jobs as well.
Like all surety bonds, a contractor bond is designed to protect the professional’s clients from poorly-executed or unfinished work. It doesn’t matter whether the contractor’s intent was malicious or benevolent; he may be required to pay for damages with his bond whenever fault is conclusively proven.
Since getting a California contractors bond is a basic “cost of doing business” for California contractors, a thriving financial industry has sprung up to help them meet this basic obligation. Since the fees involved in posting a $12,500 bond can sometimes be arduous for the smallest contractors, flexible terms (and programs that account for a poor or limited credit history) are available.