Hi All,
In my pursuit of a contractors lisence I’m not getting a clear answer to the bond question. The law states a “bond or $7,500 cash deposit” I’m hoping a bond is something short of that.
I’m getting the impression that the bond being provided by insurance co. may vary in price. Any suggestions of where to start looking.
I keep forgetting to bring this up with the GC I work for as we tend to be concentrating on the task at hand.
Any help would be great,
N
Replies
I'm in Oregon, but I carry my bond through the same Insurance agent that handles my liability.
For what it's worth, what you are getting with a bond is an agreement by the bonding company to loan you the value of your bond with your assets as collateral should you encounter the need to use your bond.
So I would assume that your $7500 cash deposit is being placed in a reserve to serve as your collateral.
I am in CA and just get my bond through one of the countless insurance/bonding offers you get shortly after getting your license application. There is a bit of variation in what they charge and it is typically cheaper if you get several years of bonding at once. I think it is somewhere between 75 and 100 dollars/year.
This is just one of those things I pay and forget. In other words it is the least of my worries as a contractor and as a cheapskate I find shopping around yields such insignificant savings I don't even bother. I suppose I should look into posting my own bond but I just can't find the time to check into all the various things I really ought to.
Karl
Thanks Guys,
Some folks were scaring me away from getting my lisence saying It'll take about $10,000 most of it being that $7,500 bond.
Looks to me like about $1000 which is the app, school, fee etc..and $2500 operating capital.
Am I missing something?
Thanks,
N
The only thing you might be missing is Liability insurance. Definitely shop around. I started out paying 3 or 4 thousand getting it from Zurich. I was referred to a different broker and now get it for around fifteen hundred. I can't remember the company name. It is a low frills policy but I intend to never make a claim for anything short of a catastrophe that equivalates to 3 or more months income.
I am a pennypincher so I don't know what is a good amount for operating capital. I hear being undercapitalized is a good way to go out of business but I seem to be able to get by on next to nothing when I have to. I tend to avoid situations that could lead to big losses, make it clear to my clients I am not a "lending institution" (ie Pay up upon completion of the job) and seem to have found a fairly profitable niche with minimal overhead.
Karl