A contractor license bond in Arizona is a specific type of surety bond required by the state of Arizona before a contractor can be licensed for business within state borders. The purpose behind this requirement is to make sure that the interests of customers are being protected at all times, and that all state regulations and laws are being complied with by the individual conducting business.

Specifically, the requirement for contractor license bonds in Arizona is intended to ensure compliance with the provisions that are listed in the Arizona Revised Statutes, which are listed within chapter 10. Any contractor who fails to live up to these statutes will be subject to a claim against their contractor bond, in which case the full amount of a valid claim could be lost by the contractor.

Do All Business Operators Need an Arizona Contractor Bond?

Generally speaking, all residential and commercial contractors must purchase an Arizona contractor bond in order to conduct business within the state. If you happen to operate both residentially and commercially, you would in fact need to purchase both types of contractor bonds, or you could purchase a dual contractor bond which covers both types. There are, however, some exceptions to this rule, so if you have any question about whether or not you must purchase a contractor bond, you can find out for sure by contacting the Arizona Registrar of Contractors.

Contractor License AZ Cost

The cost of an AZ contractor license bond is calculated based on several different components. The first of these factors depends on the annual volume of work a contractor is expected to generate in any given year. This means that, for instance, a very small contractor might only be required to purchase a $10,000 contract bond, whereas a large and very busy contractor might have to purchase a bond for $250,000.

The idea behind the value of a specific Arizona contractor bond is that it represents the maximum value of protection provided to all potential customers of the contractor. When you know the approximate value of your annual business volume, you can at least have an idea about what the cost of the contractor bond would be to you.

The monthly premiums you have to pay will be determined by the surety company from which you buy the contractor bond. That company will factor in your credit history as well as the general stability of your financial condition. In general, this calculation closely matches credit history. For instance, someone with good credit history might pay 1% of the bond’s face value or less, where as a contractor with relatively poor credit might have to pay between 2% and 3% of the bond’s total value.

The reason that credit history factors so heavily into monthly payments is that the surety company must protect itself against the possibility of default by a contractor. In the event that any claim were to be made against the contractor’s bond, the surety company would be obliged to pay out the initial sum of that claim amount, and would then pursue the contractor for reimbursement. If the contractor were to be in poor financial condition so that the claim amount could not be recovered, it would represent a complete loss for the surety company.

Getting a Contractor License Bond in Arizona

There are a number of requirements that you will be expected to fulfill in order to be eligible for receiving an Arizona contractor license bond, including all the following:

  • You will have to completely fill out an application form for a contractor bond Arizona, which will be issued by the state
  • You must receive a passing score on an examination offered by the Arizona Trade and Business Management organization
  • You must have a federal tax ID number
  • You will be required to submit your application and all relevant documentation along with the fee for both application and license
  • All applicants must ensure that any company name that is submitted for licensure is actually available and unique, before submitting an application. This can be verified with the Arizona Registrar of Contractors, and assuming no other contractor has taken your intended company name, you can reserve that name and incorporate your business.
  • Required supporting documentation includes: exam scores from your Arizona Trade and Business Management exam, your experience and project documentation forms, your photo ID, a copy of your background check, the original Arizona contractor license bond, proof of your company’s structure or articles of organization, proof that you have obtained workers’ compensation insurance, or that you intend to conduct business on a self-employed basis, and all fees that apply for your specific license type.

Where Can I Get a Contractor Bond in Arizona?

You have to obtain a bond from a surety company authorized to sell such contractor bonds in the state of Arizona. One good choice you could make is NFP, one of the largest and most trustworthy insurance and bonding companies in the US.

We will work with all contractor bond applicants to the greatest extent possible, to ensure that you can receive the bond needed, even if you happen to have relatively poor credit history. If you are under any kind of time constraint that requires an expedited process, you can apply online so that the whole process can be streamlined and carried out as quickly as possible. We can help you find a proper Arizona contractors license school to help you in your efforts.

If you have questions about any aspect of the entire bonding process, including what the cost of monthly premiums might be in your case, you can also directly contact a representative by phone or by email, in order to find out the answer to all your questions.