Utah Contractor License Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Utah 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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What Is a Contractor License Bond?

The Utah Division of Occupational and Professional Licensing (DOPL) issues licenses for all types of contractors working in Utah. When a contractor license bond is required, the purpose is to provide a measure of financial protection for DOPL and the state of Utah.

 

Who Needs One?

The contractor license bonding requirement applies only to contractors who fall into one or more of the following categories:

  • Contractors delinquent in their payments of debt or other obligations, including income taxes, workers’ compensation insurance premiums, liability insurance premiums, payroll withholding, unemployment insurance premiums, Residence Lien Recovery Fund contributions, credit cards, bank loans, alimony, and child support from the last two years
  • Contractors with bankruptcy in the last seven years or enacted judgments in the last five years
  • Contractors whose liabilities exceed the total value of their properties

If any of these apply to you, you will need a Utah contractor license bond in the appropriate amount for your license type:

  • General building and general engineering licenses—$50,000
  • Residential and small commercial contractors—$25,000
  • All other license classifications—$15,000

How Does a Contractor License Bond Work?

A Utah contractor license bond is a legally binding contract among these three parties:

  • The obligee requiring the bond (DOPL)
  • The principal (the contractor) purchasing the bond
  • The surety guaranteeing the bond

Any unlawful or unethical actions by the principal that result in financial harm to the obligee will result in a claim for damages being filed against the bond. If the surety determines the claim is valid, the principal is legally obligated to pay it.

However, the surety, in its capacity as the bond’s guarantor, has agreed to extend credit to the principal for the payment of claims. Typically, the surety will pay the claim initially and then be reimbursed by the principal within an agreed-upon time period. Not being repaid for claims paid on th

How Much Does It Cost?

What the premium will pay as the annual premium for a Utah contractor license bond depends on two factors: the required bond amount and the premium rate the surety assigns through underwriting.

The primary underwriting consideration is the risk the surety will take in agreeing to extend credit to the principal. The underwriters measure that risk using the principal’s personal credit score. The underwriters assess the risk of the surety not being repaid for claims paid on the principal’s behalf and assign a premium rate accordingly.

A high credit score is a reliable indicator of low risk and can result in a premium rate as low as 1% or even less. A principal with lesser credit will pay a higher premium rate to compensate for the added risk to the surety.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Utah 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.

 

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a Contractor License Bond?

The Utah Division of Occupational and Professional Licensing (DOPL) issues licenses for all types of contractors working in Utah. When a contractor license bond is required, the purpose is to provide a measure of financial protection for DOPL and the state of Utah.

 

The contractor license bonding requirement applies only to contractors who fall into one or more of the following categories:

  • Contractors delinquent in their payments of debt or other obligations, including income taxes, workers’ compensation insurance premiums, liability insurance premiums, payroll withholding, unemployment insurance premiums, Residence Lien Recovery Fund contributions, credit cards, bank loans, alimony, and child support from the last two years
  • Contractors with bankruptcy in the last seven years or enacted judgments in the last five years
  • Contractors whose liabilities exceed the total value of their properties

If any of these apply to you, you will need a Utah contractor license bond in the appropriate amount for your license type:

  • General building and general engineering licenses—$50,000
  • Residential and small commercial contractors—$25,000
  • All other license classifications—$15,000

A Utah contractor license bond is a legally binding contract among these three parties:

  • The obligee requiring the bond (DOPL)
  • The principal (the contractor) purchasing the bond
  • The surety guaranteeing the bond

Any unlawful or unethical actions by the principal that result in financial harm to the obligee will result in a claim for damages being filed against the bond. If the surety determines the claim is valid, the principal is legally obligated to pay it.

However, the surety, in its capacity as the bond’s guarantor, has agreed to extend credit to the principal for the payment of claims. Typically, the surety will pay the claim initially and then be reimbursed by the principal within an agreed-upon time period. Not being repaid for claims paid on the principal’s behalf entitles the surety to take legal action against the principal to recover the funds.

What the premium will pay as the annual premium for a Utah contractor license bond depends on two factors: the required bond amount and the premium rate the surety assigns through underwriting.

The primary underwriting consideration is the risk the surety will take in agreeing to extend credit to the principal. The underwriters measure that risk using the principal’s personal credit score. The underwriters assess the risk of the surety not being repaid for claims paid on the principal’s behalf and assign a premium rate accordingly.

A high credit score is a reliable indicator of low risk and can result in a premium rate as low as 1% or even less. A principal with lesser credit will pay a higher premium rate to compensate for the added risk to the surety.

 

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