In Kansas, construction contractors are not licensed at the state level. But a number of counties and cities require local licensing of contractors, and many of them require contractors to furnish a license bond as a mandatory step in the licensing process. Every contractor must take responsibility for determining whether they will need to be bonded and licensed in the jurisdictions in which they plan to operate.
Kansas Contractor License Bond
Builders in Kansas often need contractor bonds to satisfy municipal licensing rules before they can operate. Surety Bonds Agent helps review the requirement and support a fast quote request. Apply online and move ahead.
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What Is a Contractor License Bond?
When a Kansas contractor license bond is required, the purpose is to protect local licensing and permitting authorities against financial liability stemming from a contractor’s violation of applicable state laws and local construction regulations, such as local building codes.
Who Needs One?
How Does a Contractor License Bond Work?
There are three parties to every Kansas contractor license bond: the obligee, the principal, and the surety. The bond is legally binding on all of them.
- The “obligee” is the local licensing authority requiring the purchase of a contractor license bond.
- The “principal” is the contractor required to furnish the local authority with the bond.
- The “surety” is the party guaranteeing the bond.
The principal’s violation of the terms of a Kansas contractor license bond that harms the obligee or a consumer financially gives the injured party the right to file a claim for monetary damages against the bond. The principal is legally obligated to pay all claims that the surety, after investigation, finds to be valid.
As the bond’s guarantor, the surety has agreed to extend credit to the principal if the principal cannot pay a valid claim from available resources. Typically, the surety will pay the claimant directly, which creates a debt that the principal must repay to the surety within a specified timeframe. The surety can take legal action against the principal to recover the funds if the debt is not repaid according to the terms of the surety bond agreement.
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How Much Does It Cost?
The annual premium cost is a small percentage of the required bond amount. That percentage is the premium rate set by the surety through underwriting. The underwriters are primarily concerned with the risk the surety assumes in agreeing to guarantee the bond. The biggest risk is that the principal won’t repay the surety for claims paid on the principal’s behalf.
For the purpose of establishing an appropriate premium rate, the underwriters rely on the principal’s personal credit score as a proxy for risk. A bond applicant with a high credit score is perceived as financially responsible and deserving of a low premium rate because of the low risk of non-repayment. Conversely, a credit-challenged applicant is perceived as a higher risk and will pay a higher premium rate.
A well-qualified principal will most likely be assigned a premium rate between 1% and 3%.
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How Do Kansas Contractor License Bonds Work?
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Choose Your Bond Type
Select the bond you need — commercial, contract, or any specialized bond. We help you find exactly what is required in your state.
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Submit a Quick Application
Complete a short online form. It only takes a few minutes, with no extra paperwork or long verification steps.
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Get Approved & Receive Your Bond
Get fast approval and receive your bond instantly by email. Your document is ready to use right away.
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