Contractors seeking a Class A or Class B license from DPOR’s Contractor Board must meet specific net worth requirements. Those who fall short of the mark can still obtain a license by furnishing a contractor license bond in the amount of $50,000. Contractors may also be subject to a local licensing and bonding requirement depending on the jurisdiction they plan to work in.
Virginia 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 Virginia 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?
A Virginia contractor license bond provides a measure of financial protection for the Department of Professional and Occupational Regulation (DPOR) Board for Contractors and for local licensing authorities. It indemnifies the licensing authority against any legal responsibility for financial harm caused by the non-compliant business practices of state or locally licensed contractors. The financial protection also extends to the public and to project owners incurring a loss due to the unlawful or unethical conduct of a licensed contractor.
Who Needs One?
How Does a Contractor License Bond Work?
Three parties enter into a mutually bonding legal contract when a Virginia contractor license bond is purchased. These parties are DPOR or the local licensing authority (the “obligee”), the contractor (the “principal”), and the party guaranteeing the bond (the “surety”). The surety guarantees the payment of claims by agreeing to extend credit to the principal if need be.
The surety investigates each claim and decides whether it is valid. The principal is legally obligated to pay all valid claims. The surety normally pays the claim initially and is subsequently repaid by the principal, usually in manageable installments on a schedule established by the surety. Not repaying the surety can result in the surety taking legal action to recover the debt.
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How Much Does It Cost?
The annual premium for a Virginia contractor license bond is a small percentage of the required bond amount established by the obligee. Multiplying that number by the premium rate assigned to the principal by the surety yields the annual premium cost.
Virginia contractor license bonds are subject to underwriting—specifically, an underwriting assessment of the risk the surety is taking on in agreeing to guarantee the bond. The best measure of that risk is the principal’s personal credit score.
A high credit score is a hallmark of financial responsibility and suggests that the risk to the surety is low. Low risk entitles the principal to a low premium rate. The opposite also is true. A low credit score is viewed as a sign of higher risk, and a high-risk level warrants a higher premium rate.
The premium rate for a well-qualified principal usually is in the range of 1% to 3%.
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How Do Virginia 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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Complete a short online form. It only takes a few minutes, with no extra paperwork or long verification steps.
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