In Florida, contracting work cannot be done without the proper license. Additionally, the state and many municipalities require special surety bonds
before a contractor can legally work. Florida surety bonds are tied to the contracting license, and they are intended to hold contractors accountable if and when they fail to follow building codes and regulations. Answering a few of the most common questions regarding Florida surety bonds can clarify the process and help aspiring contractors work out one of the more complicated legal barriers to getting their business started. Getting a Florida contractors license bond opens the door to a world of possibilities for your business. Licensing applications for Florida surety bonds are needed to ensure the Florida contractor is authorized for the job.
How Much Does a Florida Contractor License Bond Cost?
Florida bonds come in two tiers. A Division I application will cost $20,000 for state processing. A Division II application costs $10,000. These prices are set by the state of Florida and are not negotiable. In addition to the Florida contractor license bonds
, you may also need surety bonds and additional resources that can add several hundred dollars to the final price tag.
Why Do I Need a Florida Contractor License Bond?
A contractor license
bond is required by the state of Florida to work in Division I or Division II construction. Every construction contractor must be registered with the Florida Construction Industry Licensing Board and this goes under the Florida Department of Business and Professional Regulation. The bond is the Board’s certification that a contractor is legitimate. This is needed for working on general, residential and other construction projects. Additional bond amount requirements may be set by local governments within the state of Florida. Before the completion of construction projects, each city in Florida has different requirements and needs for the contractors to post surety bonds in varying amounts. Some of the Florida construction surety bonds you will need to pay depends on a review of your personal credit score report.
Who Requires Me to Have a Florida Contractor License Bond?
The bond requirements are set by the Florida state government. They are ratified legislation and not subject to any contestation in court. Furthermore, the bond regulations are overseen by the Florida Construction Industry Licensing Board. While the legislature made the rules, the Licensing Board handles the application of those rules and will determine which businesses are or are not qualified for a license bond. Applicants for Florida Contractor license bonds have licensing requirements made by the state to ensure legitimacy in the bond. The state of Florida requires you to have a contractor license bond to begin working on a job.
Does a Florida Contractor License Bond Renew Every Year?
This will depend on the municipality where the bond is ratified. In most cases, the Florida contractor license bond will have a set expiration date, but that can vary by years. In some cases, there is no expiration date. Instead, the Florida contractor license bond remains active until it is canceled via written notice. This cancellation typically requires advanced notice ranging from 15 to 90 days.
How Do I Get a Florida Contractor License Bond?
There are multiple requirements that are involved in the process of obtaining a Florida contractor license bond. For starters, a minimum of three years of experience is expected in your related field before applicants can apply for the contractor license. For applicants, there will be tests, an insurance check, a criminal background check, a licensing fee, and a credit score check. When all of that is passed, you can submit a surety bond application to acquire the Florida contractor license bond. Florida contractor license bonds are tailored to match the licensing requirements of the state.
What Is a Construction License Bond?
The construction license bond is really a surety bond. Essentially, construction license bonds serve as a financial assurance that a contractor
will abide by codes and regulations within the region where work is done. The bond is prepaid and held by the surety bond company. Construction license bonds acts as a sort of insurance policy against damages incurred by violating regulations. The idea is to provide a financial incentive for contractors to follow regulations, and it offers financial support to parties that may be harmed when regulations are violated.
What Is a Licensing Bond?
A licensing bond is a contract between the Florida contractor, the client, the state, and the surety bond company. That may sound like it includes a lot of parties, but it’s fairly simple. The Florida contractor is obliged to follow codes and regulations. If they fail to do so, the Florida surety bond company will release the bond to the client and/or state as recourse against the violations. In short, it’s a cash incentive to do the work correctly.
What Is a Surety Bond in Florida?
A surety bond is a multi-party contract that ensures money will be paid to a party if certain conditions are met. Surety bonds guarantee that certain tasks will be met and fulfilled. Construction licensing bonds are a specific type of surety bond within the state of Florida. If a contractor violates the terms of the bond, cash will be paid to the client and/or government as stated in the bond. That money is held as an incentive for contractors
to stay within code and regulations while working. The insurance company that supports the bond is the surety. If the principal does not carry out the task, the surety will provide a line of credit. The insurance company will pay compensation that cannot surpass the Florida surety bond amount if the claim is valid.
There are different types of surety bonds for different purposes. A few of the most common surety bonds in Florida are construction, license and permit, commercial, and court bonds.
How Much Is a License Bond?
A license bond amount will vary by type and region. State bonds
cost between $10,000 and $20,000 in Florida. Local bonds range from hundreds of dollars to thousands of dollars, but the average for a municipality in Florida is $5,000. Additional surety charges may be applied to businesses/contractors with a credit score below a certain threshold. That credit score threshold amount is determined case by case. By first ensuring that your credit score is good, you will be able to then look into a license bond in Florida.