Nevada and California Contractors License Bonds

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The respective State Licensing Board requires contractors license bonds in Nevada and California. An active bond with an “A” rating must be in place to keep the contractor’s license in active status.

The license bond protects the state and is a third party surety bond.  In Nevada, the Contractors’ Board sets the bond amount based on the license limitation.  The bond and limitation can be increased providing the contractor’s financials can support a higher limit.  Bond premiums are based on the principle contractor’s credit and are renewed yearly.

California requires most contractors to carry a $12,500 surety bond and there is no limitation to the license.

The bond may be attached for poor workmanship and/or failure to complete a contract.  A supplier, customer or other contractor can place a claim against your bond.  If the surety pays out on the bond, the contractor will need to pay the surety back, pay any fines, attorney fees and supply a new bond to the contractors board to continue doing business in their respective state.  If the surety pays out on a bond, you may not be able to get a surety to write another bond for you and this could possibly put you out of business.

Bid, Payment & Performance Bonds

Contractors may also be required to obtain a Payment & Performance bond for a specific job.  In Nevada, any Government work over $25,000 requires a P&P bond.  These bonds are in addition to the Contractors License Bond and are solely for the project requiring the bond. 

Payment and Performance bonds are underwritten differently than license bonds and require a separate application; financial and stricter underwriting guidelines are followed.  The P&P bond is for the full amount of the job that you are bidding.

The bid bond is the included in your sealed bid and if you are the low bidder, this bond guarantees the amount you stated in your bid.  If you are unable to honor that bid for some unforeseen reason, penalties will apply.

American Contractors Institute also offers the following types of surety bonds:

  • Bid bonds
  • License bonds
  • Notary bonds
  • Offsite bonds
  • Payment & Performance bonds
  • Union Wage & Welfare bonds

 

Please click here for the Bonding Application


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