There is work for contractors all year around in New York. But working as a contractor in the state is more than knowing how to do construction, plumbing or electrical work. Working legally in the state not only means getting the appropriate license but also securing a surety bond for your contracting work. A bond provides protection for your clients in case the project goes badly or you defraud the client during the project.
When you work in New York as a contractor, you are required to be bonded. A license bond, which is a type of surety bond, is a way to provide assurances to your clients that you will provide the work in the contract for the payment provided. More specifically, a these bonds ensures that you will not defraud your client and, if you do, the bond reimburses the client for what was paid. In New York, surety bonds are required as part of operating legally for many types of contracting. Without the appropriate bond, it is not permissible for you to do contracting work in the state. The amount of the bond varies based on the type of contracting work done.
Why Is this Bond Important?
The bond you obtain as a New York contractor is important because it acts as a promise between you and the client. By being a licensed and bonded contractor, you are letting clients know that you take the job seriously and will behave professionally and ethically as you fulfill what is required of you through the contract with the client. This does not mean that un-bonded contractors always defraud clients. However, by going through the process of getting a bond, you are signifying to your clients that you are dedicated to high-quality professionalism in your business relationships.
How to Get an NYC General Contractor License Bond
The process of getting a New York license bond as a contractor is relatively easy. These steps will help ensure that you have what is necessary to do contracting work in the state of New York. Companies that provide bonds for contractors are financial organizations. Once you find the organization, they will have a specific application process they use for obtaining a surety bond. Fortunately, most companies now offer online applications, which streamlines the process for you. The application will ask for relevant information about you and your contracting business.
The application will also look at financial information, including your credit score, to determine whether you are approved for the license bond or not. If you have poor or bad credit, you may have difficulty in obtaining a bond for your contracting work. However, it does not mean you will be excluded. Working with the bonding company ca help you develop a solution that works for you in spite of your poor credit rating.
You must pay for your bond. The amount you pay depends on the amount of the bond. In New York, the amount it costs to secure a bond varies significantly, ranging between $2,000 and $25,000. The company you work with can provide you with the information you need about the cost of the bond.
Claims Using Your Surety Bond
Since a surety bond protects your clients during the work, it is a client who would file a claim against your bond. This happens if they have been defrauded or that your work has not adhered to the agreement you made for the project. If the claim is approved, the bonding company reimburses the client according to the terms of your bond. If that happens, you will be required to reimburse the surety after that. However, if you do high-quality work that meets the terms of your contracts, there will be no need for a client to make a claim against your surety bond.
If you do contracting work without a bond and the client has reason to be dissatisfied with your work or has been defrauded, the client will likely take legal action against you rather than filing a claim on a bond. This can not only lead to a greater financial burden to you but can lead to the loss of your license and inability to do contracting work in the state of New York. A bond helps protect you from this legal action so you can continue working as a contractor even if there is a bad relationship with one client.
Once you get your license and surety bond in New York, you’ll be ready to work as a contractor. It may seem an expensive and unnecessary step, but being bonded will assurance your clients that you will do the work professionally and ethically from start to finish.
Our team can help get you an NYC contractor license bond today and answer any questions you may have.