How to Find the Best Contractor License Bond Rates

By: | September 7th, 2020

Image by skeeze from Pixabay

As you probably already know, every contractor nowadays needs to be properly licensed. Depending on the state you live in, you have to meet certain requirements in order to get the license you need to operate in your area. What about being bonded, though? Is that also a necessity or is it just another method designed for you to waste your money?

Oh, it’s definitely a necessity, for several different reasons. The only thing is, you’ll need to find the best California contractor license bonds so as to make sure that you are getting the best out of that deal. Before I get to explaining how to find the perfect license bond rates, let me quickly explain what being bonded means. The explanation goes out to all of those who still aren’t properly acquainted with the whole concept.

What Is A Contractor License Bond?

When you first start learning about this concept, you might confuse it with general insurance. It’s true that these bonds are rather similar to insurance and that they offer a certain level of protection, but the whole idea is very much different. Plus, having insurance doesn’t mean you don’t need a license bond. In fact, these are a requirement in most states.

Since these are a requirement, it means that you won’t be able to get your license without being bonded. Three different parties are involved in the process and the interests of all three of them are properly protected this way. As a contractor, you need to hold a surety bond with an agency, since that’s required by a third party, be it an individual or an organization.

Such an agreement stipulates that you’ll perform the work you have promised to perform, which means that your customers have a type of a guarantee. If you fail do to what the agreement stated, the agency will pay claims to the customer on your behalf. That way, your customers are properly protected and so are you, against any unexpected circumstances. By doing this, you also increase your chances of getting hired, since customers are far more likely to work with people offering them such a guarantee. Go here to learn some more about the whole process.

How To Find The Perfect Rates?

Before you start looking for agencies offering these services, you should understand how the rates are formed in the first place. The bond amount you need depends directly on the type of work you do, as well as where you do it. There are a couple of factors that are taken into consideration when these are priced.

Some of the factors include the total amount of the bond, the history of claims, your business and personal financial history, as well as the type of the bond you need. Those types include construction, performance and bid bonds. The reason why these agencies take a look at your financial history is because they also need some kind of a guarantee.

These agencies are also taking a certain risk when issuing you a new bond or a renewed one. That’s why they need to check your credit score, as well as your history of claims. If they discover certain red flags, they might not be willing to issue the bond. In any case, due to all those factors, these are priced rather differently and you’ll need to do a couple of things in order to find the perfect rates for you.

Get A Few Different Quotes

Getting your bond at the first agency you come across might not be the wisest idea, simply because you should compare a few quotes before deciding on one of them. It goes without saying that you want the best rate and you can’t know what the best rate is if you don’t get offered a few of those. That’s why you need to make sure that you get a few different quotes from different agencies.

The question is how to find those agencies and the answer is pretty simple. As you probably already know, there’s not a thing that you cannot find on the Internet nowadays. These agencies are no exception, which means that you should go online and search for them in order to compare their services and their prices. That should be your number one step in searching for the best rates.

Read Reviews About Particular Agencies

If you want to work with a reliable agency that will offer you the best rate, you’ll also need to find out what previous clients are saying about them. Once again, the Internet is of huge help in this regard. What you need to do is find online reviews about particular agencies. Those will help you figure out how reliable and trustworthy those specific agencies are, as well as how good their rates are.

You might think that you won’t be able to find a lot of useful reviews online, but that’s not true. If you take your time to dig a little deeper, you’ll definitely be able to find a lot of objective opinions to help you form your own. Forming an objective opinion is the key to choosing the best agency and the best rates, which is why reviews can be of huge help.

Take Steps Towards Improving Your Credit Score

You are the one responsible for getting the best bond rate, meaning that you’ll have to play a part in setting the price. The first thing that you should do towards achieving the perfect price is make sure that your credit score is at its best. Take the necessary steps towards improving your credit score before getting into any deals and agreements.

Take Steps Towards Organizing Your Business Records

As you already know, the price of the bond depends on the financial records of your business as well. That means that you’ll need to do your best to keep everything perfectly organized. Finding the best rate depends both on your finances and the agency you choose, so make sure to take everything into consideration.


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