What You Need To Know About California Contractor Bonds

By Cedric Lopez

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 is a way to ensure that everybody gets paid. That includes laborers working for you, subcontractors and suppliers. A qualifying individual bond can be required in cases where contractors in charge of projects have less than a ten percent interest in the company they work for.

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.

If you want to bid on government contracts, you will probably have to have a surety bond. This is a type of insurance for them in the event you don't live up to the promise of the bond. The government agency is the beneficiary and, as such, will be the one to file any claim.

It will be your responsibility to settle any claims made against you and to pay all the legal fees incurred. An indemnity agreement will be part of the surety bond you sign. This agreement states that, in the event the surety has to pay a claim, you will repay it in full. You will be responsible personally as well as corporately.

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.

About the Author:

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