What You Need To Know About California Contractor Bonds

By Florence Robertson

If you've decided to go into the construction business on the west coast, you will have to do more than just buy a pickup truck, a trailer, a ladder, and some tools. You have to be licensed, insured, and bonded. There will be forms to fill out, fees to be paid, and specific information needed by the licensing board. In order to have the correct coverage necessary, it's important to understand the different Los Angeles California Contractor Bonds and what they cover.

You can not do construction work for the public in California until you get a license bond. This is what protects the people you are working for if you fail to do the job you were hired for. If your work is defective is any way, the customer can file a claim against you.

A license bond ensures your laborers get paid. It is not protection for you or your company in any way. Contractors without any ownership in the companies they work for may be required to get a qualifying individual bond if they are overseeing construction projects.

You get a fidelity bond when you want protection for your customers and yourself from the potential dishonesty of your employees. Business service bonds protect your customers if an individual in your employ steals or commits some other dishonest act. You need a employee dishonesty bond to protect yourself and your business in the event one of your employees steals from you.

Government contracts can be very lucrative, but you probably won't be able to bid on any unless you purchase a surety bond. This bond is their insurance in case you don't adhere to what is promised by the bond. The governmental agency is the named beneficiary and can file claims.

You will be responsible for satisfying any and all claims and pay any legal fees incurred because of them. As part of the surety bond you will be required to sign an indemnity agreement. This is your promise to repay, both corporately and personally, any money the surety actually had to pay on your behalf.

Your credit could be a factor when it comes to getting any kind of bond. An agency issuing a bond to a small contractor will be looking a that person's personal credit and won't issue a bond unless that credit is good. Contractors who have poor credit ratings will have trouble getting bid and performance bonds in order to work on government contracts. Large companies can get the bonds they need, but have to submit strong financial statements and have a stable history in the industry.

You can go to the California State License Board's online site to get additional information and start the process of obtaining your license. The necessary forms are all online. There are study guides available to help those needing to take the licensing test as well as explanations for the paperwork required. After you've submitted your application, you can check its status on this website.

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You can get an overview of the benefits of using Los Angeles Contractor Bonds and info about reputable California Contractor Bonds today.

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