Contractor bonds in California

A contractor bond is an assurance that safeguards your clients as a contractor. If you (contractor) break the rules, then the client (homeowner) can make claims against your bond which you’re responsible to pay.

A contractor bond is used to protect the client from an insufficient job and if a contractor unexpectedly quits the job or doesn’t comprehensively finish the project for whatsoever cause. The contractor’s bond will also protects homeowners from being encumbered with an unpaid supply bill or the cost of unpaid workers that are assisting the contractor with the project. Also the bond will cover any damage to the property due to a contractor’s carelessness or in grave situations when property is lost or stolen.

The contractor bonds in California are mainly specialized in license bonds and general accountability insurance for California contractors.

contractor bonds california

A contractor should ensure that he or she does the following to limit the probability of claims being made against his bond.

  • A contractor should at all times put the write down the terms of any construction contract and any amendments that he is bestowed with.
  • A contractor should keep correct records of all funds paid and received and even write down the agreement reached upon if the project he was carrying out is ended.
  • In case of any impending problem the contractor should communicate regularly and meritoriously with project vendors.

However should things go out of hand and a contractor receives a notice from its surety company that a claim has been filed against his or her bond, the contractor should immediately contact the surety to respond to the claim and explain, in detail, his or her position. The contractor should also submit all documentation relevant to the claim. If a complaint was filed with Contractors State License Board (CSLB) the contractor should respond immediately and fully to the complaint and provide Contractors State License Board (CSLB) all requested information for the duration of the investigation. Both Contractors State License Board (CSLB) and the surety take complaints very seriously, so cooperation is important for a full understanding of the fact

In the state of California the contractors that operate there need to be in possession of a California contractor bonds. The surety bond is an agreement in which a bond (surety) company assures the State of California that the contractor will act in accordance with the state Contractors License Law which is usually in B&P Code Section 7000. If the law is violated there are strict disciplinary actions that the contractor is to face. Contractor’s License Law in California describes specific abuses that the bond should cover. Therefore if the contractor is not compliant with the bond conditions, a consumer, supplier or an employee can file an assertion against the bond.

Some facts about California contractor bonds

For each contractor license bond that is hand out, functions as a lawfully enforceable agreement that predicaments together three distinct parties. These parties are:

  1. The contractor (construction professional) that buys the contractor license bond. He or she is the principal party.
  2. The state (like the state of California) agency that requires the contractor to be bonded acts as the obligee.
  3. The company that gives the bond is the surety.