Getting a contractor license bond in Utah is necessary for any contractor who desires to conduct business within state borders, and it is required by the state of Utah as a protection for customers who avail themselves of services provided by that contractor. Specifically, Utah contractors bond is considered essential by the state because it will tend to enforce compliance with the requirements listed in Title 58 of the Utah Construction Trades Licensing Act.
Any contractor who subverts or violates the requirements listed in Chapters 1 or 55 of Title 58 will be considered to be guilty of non-compliance, and any contractor who causes a client to experience some kind of financial setback as a result of faulty service would be subject to the consequences of bond violation. A customer who feels that a contractor has violated the terms of an agreement could potentially file a claim against the contractor license surety bond, and assuming the claim were found to be valid, that customer could then receive the amount of a claim made.
Whether you are in Salt Lake City, West Valley City, Provo, West Jordan, Orem or anywhere else, we can help you become a bonded contractor in Utah.
How Do Contractor License Bonds in Utah Work?
An applicant for a Utah contractors bond would have to contact the state for the appropriate application form and submit all required documentation, as well as the fee for applying. The actual Utah contractors bond would be issued by a surety company that specializes in bonds and insurance, and this application is also the responsibility of the contractor.
In the actual terminology of a contractor bond, the contractor would be considered the principal, and the company which issues the bond is known as the surety, while the state organization requiring the bond is known as the obligee. In the event that any customer feels that a violation has occurred of the agreement between themselves and the contractor, such that financial losses have been sustained, they would be within rights to make a claim against that surety bond, to recover the amount of any damages.
Initially, the surety company would be obliged to pay the amount of a valid claim, after which it would more than likely attempt to recover that amount from the principal who violated terms of the bond.
Do All Contractors Need to Post a Bond?
To be absolutely sure about whether or not you as a contractor are required to purchase a Utah contractor bond, it will be necessary to verify that with the Division of Occupational and Professional Licensing within the state. Generally speaking however, all general building contractors, all general engineering contractors, and both residential and commercial contractors will have to be bonded according to state requirements.
In all, there are upwards of 30 different types of professional contractors who are obliged to obtain a Utah contractor bond, so it is more than likely that if you are a professional contractor in Utah, you will need to obtain a contractor bond in order to conduct business.
Cost of a Utah Contractor License Bond
There are a few elements which go into the overall calculation for the cost of a contractor license surety bond in Utah, and the amount of the bond actually represents the total compensation which could potentially be paid out to a claimant. The actual cost of a Utah contractor bond will generally be between 1% and 3% of the face value amount of the bond, but that figure can be shifted upward by other factors.
For one thing, your credit score as a contractor is very important in determining the cost of your monthly premiums on a bond. If you have fairly poor credit history, you will more than likely have to pay higher premiums, because you will be considered more likely to default in the event of any claim made against the bond.
Your financial stability is also a factor considered by the surety company issuing the bond, because that’s another indicator of the potential for you to default, should any claim be made. The total of the bond itself, upon which the 1% to 3% month premiums will be based, will be arrived at by determining the annual volume of business that your company does in a typical year. For instance a large company which does $150,000 worth of business would probably need a surety bond of about $150,000.
Where to Get a Utah Contractor License Bond
There are many agencies throughout the country that sell various types of insurance and bonds, but not all of them are licensed to do so in the state of Utah. When searching for an appropriate surety company to purchase your bond from, you should first make sure that the company is authorized to sell insurance and bonds in the state of Utah.
After that, it’s probably a good idea to do some comparison shopping, to see what kind of a monthly rate you can get on your bond premiums. NFP is extremely affordable, authorized to sell insurance and bonds in every state in the country, and is highly reliable.
As one example of our flexibility, if you are having difficulty securing a contractor bond because of poor credit history, you may still be able to work with our representatives to get the bonding you need. If you are under a time constraint, you can fill out an online application on the site. Once your application has been reviewed, the whole process can be expedited by the streamlined NFP process, so that you can receive the bonding you need in the shortest possible timeframe.