In order to obtain a license, the Arizona Registrar of Contractors (AZROC)
requires that contractors file for a surety bond in the form a
license bond in the amount requires by the license classification and the anticipated
annual gross volume for the business. This bond assures clients that the
contractor will perform the work, pay all subcontractors and laborers,
and comply with all building codes set forth by the state. If you’re
preparing to take your contractor licensing test, these FAQs about license
bonds will help you get your business up and running as soon as you pass the exam.
Where Can I Obtain a Bond?
Surety bonds may be obtained from any insurance company which is authorized
by the Arizona Department of Insurance to issue
contractor’s license bonds in Arizona. Bonds may also be provided in the form of cash or a certificate of deposit
from any bank which operates in the state.
What are My Bond Limits?
License bonds are established based upon the expected gross volume of work
for the ensuing fiscal year. Residential general contractors require a
$9,000 bond for gross volume less than $750,000 and a $15,000 bond for
gross volume in excess of $750,000. The highest bond amount is $100,000
for commercial general contractors with an expected gross volume in excess
of $10 million. A full list of bond limits and regulations is available
on the AZROC website.
How Long is a Bond Valid?
Surety bonds must be continuous, which means there is no termination date
on the bond. You may be required to pay premiums to the insurance company
to keep the bond in force. If your bond is in cash, the bond will be retained
until two years after the license terminates, at which point you may apply
to have the bond released to you if no claims are made against the bond
in that time.
Arizona Contractor License Center can guide you through every step of becoming
a licensed contractor. In addition to our licensing classes and test preparation
services, we also provide bonding assistance to help contractors
secure the proper bonds. Call us today at (888) 414-1925 to learn more about our services.