If you are working as a contractor in California, then you most likely already understand the importance of having a license, and of having a contractor bond that will serve to protect not only your clients, but also you, in case of not meeting the contract requirements. The state of California requires contractors to have a surety bond of $25,000 in order for their license to stay active. And, that is a requirement that you absolutely have to meet.
Of course, in addition to meeting the requirements and thus ensuring that you are staying in compliance with the laws, there are other benefits that come with actually having this bond. For one thing, you will increase your chances of landing certain projects, because clients are often reluctant to work with contractors that aren’t bonded. And then, there are specific projects that require proof of bonding and that won’t even consider you if you don’t have it.
Not to mention that you will get to build a great reputation when you have the bond, because clients will perceive you as trustworthy and reliable. And we all know how important reputation is for contractors, and how they rely on it to land clients and projects. So, there is no doubt in my mind that you understand the importance and the benefits of getting a California contractors license bond, and that you don’t want to ignore it. Yet, there is one thing that is probably bothering you here a bit, though.
To put it simply, while you know that you need to get it, you may not be sure how to get the right one. And, that could lead to you making certain mistakes in the process, and thus being unhappy with the deal you’ve secured with a surety company. This is precisely what is worrying you, and you would love to be able to avoid those mistakes and thus ensure that you are doing what’s best for yourself as an independent contractor, or for your construction business for that matter.
Well, the great news is that you can avoid those mistakes, if you only get familiar with them first. The even better news is that I will now list some of the most common ones for you, aiming at getting you acquainted with them, and thus helping you avoid them. So, without any further ado, let us check out those common mistakes that you should do your best not to make when getting a contractor license bond in California.
Assuming You Don’t Need It
It is not uncommon for contractors to assume that they don’t need this bond, believe it or not. Yet, like I hinted at above, if you don’t have it, you are likely to miss out on quite a lot of amazing projects, because the clients won’t even consider you. Furthermore, bonding is not only about protecting your clients, but also about protecting your business, because you won’t have to pay out of your own pocket in case of a claim being made against you. Meaning, thus, that you need it not only to adhere to the laws and land projects, but also to protect your business financially.
Thinking That All Solutions Are the Same
Another thing that people often assume is that all bonding solutions are the same, and that all surety companies are the same. This, however, is a serious mistake that could lead to you getting the wrong solution and paying a premium that doesn’t work for you. So, don’t make this assumption. Instead, do your research and check out more options before agreeing to anything, as that is how you will be able to make a more informed, and thus a smarter, decision.
Understand bonds in construction even better: https://www.designingbuildings.co.uk/wiki/Bonds_in_construction_contracts
Not Working With a Broker
A lot of contractors assume that they can easily find the right solution for them without anyone’s help. Once again, this is often not the right course of action, because you cannot be familiar with all the surety companies out there, and you may not be able to land the best deal on your own. This is why you should work with brokers, and thus let the experts help you find what works best for you, as that is their specialization. Working with brokers is sure to make this entire process much easier, as well as lead you towards getting the perfect solution and being happy with it.
Or Choosing Random Brokers
The above, however, could lead you towards making a mistake of a different kind. In short, when you realize that you need to work with a broker, you may wind up choosing a random one, assuming, once again, that they are all the same. Don’t do this, though. Instead, take your time to carefully research different brokers, checking their experience and reputation, as well assessing the quality of communication and services in general when you decide to get in touch with them. The idea is for you to choose great brokers, as that is how you’ll get connected to great surety companies, and thus get the best rate for your contractor bond.
Not Getting It on Time
Here is another mistake that contractors often make. They assume that there is no rush in getting the bond, and they, therefore, postpone it. Completely unaware of the fact that they can get their license suspended and thus be prevented from working if they don’t have this bond on time. So, check the rules with the Contractors State License Board (CSLB) and don’t postpone this process for far too long, because you may get in trouble.
Not Renewing It on Time
Similarly to the above, you may fail to renew your contractor bond on time. Once again, this can be reason for suspension, even if you are just one day late. So, be mindful of the deadlines and don’t miss them, because you don’t want to get in trouble with the CSLB, and you don’t want to experience suspensions and delays in your work due to not renewing your bond on time.
