At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Illinois contractor license bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.
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In Illinois, certain types of contractors must be licensed and bonded at the state level. Others may need to obtain a local license, depending on their work type and the municipalities or counties in which they do business. When an Illinois contractor license is required, the purpose is to provide a measure of financial protection for the contractor’s clients in the event that the contractor does not live up to their professional obligations.
Who Needs One?
Only roofing and plumbing contractors must be licensed and bonded at the state level. The Illinois Department of Financial and Professional Regulation issues licenses for roofing contractors. The Illinois Department of Public Health handles state licensing of plumbing and irrigation contractors.
Additionally, certain municipalities require licensing and bonding of contractors working in those jurisdictions. The required bond amount varies by jurisdiction and license type.
How Does a Contractor License Bond Work?
An Illinois contractor license bond, statewide or local, is legally binding on three parties:
A claim may be filed by the injured party when the principal’s unlawful or unethical business conduct results in financial harm to a client. The principal is legally obligated to pay any claim the surety finds to be valid up to the required amount of the bond (also called the bond’s “penal sum”).
However, the surety has guaranteed the bond, meaning that the surety will extend credit to the principal if necessary to pay a valid claim. To expedite the process, the surety will pay the claimant directly and allow the principal a certain period of time in which to repay the resulting debt to the surety. Not being repaid for that debt gives the surety the right to take legal action against the principal to recover the funds.
Contractor license bonds usually are sold for an annual premium that is a small percentage of the required bond amount, that percentage being the premium rate. The surety assigns each principal a premium rate based on a case-by-case underwriting assessment. The main underwriting concern is the risk the surety will take in agreeing to guarantee the payment of claims by the principal.
The primary measure the underwriters use in assessing the risk of the surety not being repaid for claims paid on behalf of the principal is the principal’s personal credit score. A high credit score signals low risk and a low one is a sign of higher risk. Low risk deserves a low premium rate and higher risk leads to a higher rate. Bond applicants with good credit typically are assigned a premium rate in the 1% o 3% range.
We proudly serve all 50 states, offering a full range of surety bonds. To buy surety bonds online:
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We work to get you bonded as quickly as possible, often in 24 hours or less.
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Request an online quote today! Or speak with one of our knowledgeable surety bond agents about the commercial bonds you are interested in.
