Top 5 Tips for Purchasing a Contractor License Bond
Often, there is a lot of confusion among contractors surrounding on the right way to go about purchasing a contractor license bond.
In many cases, contractors are usually not sure they are getting the right deal, or whether they are paying more or less of what their counterparts are paying.
Either way, understanding how to go about purchasing a license bond and tips to help you get a raw deal is vital.
And in this article, we shall share with you the top 5 tips for purchasing a contractor license bond.
Know your Credit Score
Are you wondering why your company pays for more premiums than your competitor, and yet you offer the same services, are in the same locality and served by the same bond provider?
Well, a major factor behind the contractor bond price disparity might be your credit score.
Like loans; a credit score is of the essence when it comes to purchasing a contractor’s license bond.
Simply put, the credit score determines how much premiums you pay. For instance, if you have a good credit score, you are likely to get a huge rate discount, and the reverse is true. This is not to mention that some providers might even shy from providing you their services if you happen to have a poor credit score.
Your credit score takes a multi-faceted approach, and is usually determined through various means, or rather factors. Two of the popular factors include your current financial situation as well as your financial health.
Now, to ensure that you will have favorable terms when applying for a license bond, it’s critical that you have a decent financial score by paying your loans timely.
This is not to mention that your business financial situation is also considered too. And so, to get huge discounts, we advise that you keep your bank account in tip-top condition too.
Fulfill All the License Bond Requirement
There are several conditions that you will require to fulfill to purchase a bond.
To acquire a bond, it will first have to get drawn by a surety company, which is licensed by the state you are planning to take your bond from.
Secondly, your bond has to be signed an attorney, before it is approved by the Attorney General’s Office.
And finally, once you are approved, it’s required that you submit it at your Contractors State License Board Head office for verification.
Given that acquiring the bond is such as tedious task, it’s vital that you ensure you meet the eligibility criteria and have all the mandatory requirements before you apply.
Buy in Advance
Traditionally, contractors are accustomed to purchasing a license bond only when they land a project or are seeking one.
However, financial experts indicate that it’s always a good idea to have purchased a license bond in advance
Though it will not serve any purpose when you are not working on a project, you might get lucky to land an emergency project, where you will not have to process the license.
Without a license at hand, it means you will either have to forego the project or even work against the confines of the laws, which we strongly desist.
Allow a Surety Agency to Create your Bond File
If you are a contractor, you might ask why you can’t go to the CSLBto get your license.
This is because there’s a protocol to follow when filing your contractor license bond.
And this is where the middleman, or rather surety bond agency comes into play.
Surety bond agencies will help you, the contractor to get their bonds.
However, when choosing an agency, always go with those with a reputation for professionalism and reliability.
Keep Clear and Organized Records
Assuming you have purchased your bond, it is also crucial that you maintain clear and accurate records.
In case of any potential issue, it’s vital that you quickly communicated with your subcontractors, project managers, or homeowners before the issue spirals out of control.
Remember a claim on your bond will only but force you to pay more to work legally.
While the factors mentioned above are not the only tips you need to purchase a contractor license bond, they will help to steer you in the right direction, and they should help you find the right provider.