Wisconsin 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 Wisconsin 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 purpose of a Wisconsin contractor license bond is to require contractors to operate in accordance with applicable state laws regulating the construction industry and provide financial protection for the state in the event of a regulatory violation.

 

Who Needs One?

In Wisconsin, contractors doing general contracting work must obtain a dwelling contractor license from the State of Wisconsin Department of Safety and Professional Services (WDSPS). Specialty contractors also must be licensed as dwelling contractors at the state level, as well as obtaining licenses in their own specialized trades. One of the prerequisites for licensing as a dwelling contractor is providing WDSPS with a $25,000 contractor license bond. (There may be local licensing and bonding requirements as well for some contractors.)

How Does a Contractor License Bond Work?

A Wisconsin contractor license bond is a three-party legally binding contract between an obligee, a principal, and a surety.

  • The obligee requiring the bond and financially protected by it is WDSPS.
  • The principal required to purchase a Wisconsin contractor license bond is the contractor obtaining an initial license or license renewal.
  • The surety is the party guaranteeing the bond.

A regulatory or contractual violation by the principal that causes financial harm to the obligee or a customer can result in the injured party filing a claim against the bond. The surety will investigate each claim, and if it is found to be valid, the principal is legally obligated to pay it.

But that’s not as straightforward as it might seem. In guaranteeing a Wisconsin contractor license bond, the surety is agreeing to extend credit to the principal, if necessary, to ensure payment of valid claims. However, the surety doesn’t write a check to the principal. Rather, the surety will pay the claimant directly, creating a debt that the principal must subsequently repay to the surety within a certain timeframe. The surety can take legal action against a principal who does not repay that debt on schedule.

How Much Does It Cost?

The annual cost of a Wisconsin contractor license bond is calculated by multiplying the $25,000 bond amount by the premium rate assigned to the principal by the surety. The premium rate is set through an underwriting assessment of the risk to the surety—specifically the risk that the surety won’t be repaid for claims paid on behalf of the principal. The principal’s personal credit score is a key factor in that risk assessment.

A principal with a high credit score has a history of financial responsibility and is considered a low risk to the surety. The premium rate will be low as well. The reverse is also true. A low credit score is correlated with a higher risk to the surety, warranting a higher premium rate. A well-qualified principal is likely to pay a premium rate between 1% and 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Wisconsin 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 purpose of a Wisconsin contractor license bond is to require contractors to operate in accordance with applicable state laws regulating the construction industry and provide financial protection for the state in the event of a regulatory violation.

 

In Wisconsin, contractors doing general contracting work must obtain a dwelling contractor license from the State of Wisconsin Department of Safety and Professional Services (WDSPS). Specialty contractors also must be licensed as dwelling contractors at the state level, as well as obtaining licenses in their own specialized trades. One of the prerequisites for licensing as a dwelling contractor is providing WDSPS with a $25,000 contractor license bond. (There may be local licensing and bonding requirements as well for some contractors.)

A Wisconsin contractor license bond is a three-party legally binding contract between an obligee, a principal, and a surety.

  • The obligee requiring the bond and financially protected by it is WDSPS.
  • The principal required to purchase a Wisconsin contractor license bond is the contractor obtaining an initial license or license renewal.
  • The surety is the party guaranteeing the bond.

A regulatory or contractual violation by the principal that causes financial harm to the obligee or a customer can result in the injured party filing a claim against the bond. The surety will investigate each claim, and if it is found to be valid, the principal is legally obligated to pay it.

But that’s not as straightforward as it might seem. In guaranteeing a Wisconsin contractor license bond, the surety is agreeing to extend credit to the principal, if necessary, to ensure payment of valid claims. However, the surety doesn’t write a check to the principal. Rather, the surety will pay the claimant directly, creating a debt that the principal must subsequently repay to the surety within a certain timeframe. The surety can take legal action against a principal who does not repay that debt on schedule.

A Wisconsin contractor license bond is a three-party legally binding contract between an obligee, a principal, and a surety.

  • The obligee requiring the bond and financially protected by it is WDSPS.
  • The principal required to purchase a Wisconsin contractor license bond is the contractor obtaining an initial license or license renewal.
  • The surety is the party guaranteeing the bond.

A regulatory or contractual violation by the principal that causes financial harm to the obligee or a customer can result in the injured party filing a claim against the bond. The surety will investigate each claim, and if it is found to be valid, the principal is legally obigated to pay it.

But that’s not as straightforward as it might seem. In guaranteeing a Wisconsin contractor license bond, the surety is agreeing to extend credit to the principal, if necessary, to ensure payment of valid claims. However, the surety doesn’t write a check to the prinicpal. Rather, the surety will pay the claimant directly, creating a debt that the principal must subsequently repay to the surety within a certain timeframe. The surety can take legal action against a principal who does not repay that debt on schedule.

 

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