Arizona Contractor License Bonds

What you need to know about Arizona Contractor License Bonds

Arizona Contractor License Bonds

How much does a construction contractor bond cost in Arizona?

Arizona has two main categories of contractor license bonds (CLBs): commercial and residential. Like many states, the cost of a majority of the Arizona CLBs depends on your credit. This means the premium—what you pay—for your bond will be a percentage of the bond amount. That percentage is the premium rate, which is determined by your credit. The premium rate for standard credit starts around 1-3%, while bad credit may start around 6% or higher. 

The bond amount varies based on the license classification and the contractor’s contemplated volume of work. Consequently, creating a broad range of prices for these bonds. The Arizona Registrar of Contractors has a chart that helps determine your required bond amount

Say a Residential General Contractor has more than $750,000 in annual gross volume of work. In this case, they will need a bond amount of $15,000. With a 1% premium rate, they can expect to pay $150 for their bond. Fortunately, we offer free quotes for all bonds.

Why are contractor bonds important in Arizona?

The Arizona Registrar of Contractors requires contractors to get a surety bond to protect the public from damages incurred by the contractor’s violation of licensing laws or unsatisfactory work. Obtaining a surety bond is a requirement contractors must fulfill before earning an active license.

The state of Arizona divides contractor bonds into four categories, listed below:

  1. residential general contractors
  2. residential specialty contractors
  3. commercial general contractors
  4. commercial specialty contractors

Arizona has a wide variety of license classifications. Despite there being only four categories listed above. Some contractors may have a dual license for residential and commercial work. If so, calculate the bond amount by combining the amount required for both license types.

How do I get my general contractor’s license in Arizona?

Typically, when labor and materials exceed $1,000 or if a permit is required, you must have a license. While almost all contractors need a license, there are some exemptions. Below we’ve outlined what you can expect from the licensing process.

  1. Identify a Qualifying Party: A Qualifying Party is a regularly employed person with the knowledge and experience needed to hold a license. The Qualifying Party must meet the experience and exam requirements for their license classification.
  2. Pass the Examination(s): The Qualifying party must pass the AZ SRE Statutes and Rules Exam. As well as the special exam for their license classification, if they don’t qualify for a waiver.
  3. Submit to Background Checks: The applicant and the Qualifying Party must submit to a background check.
  4. Register Your Business: LLC’s and corporations must register with the Arizona Corporation Commission. Partnerships register with the Arizona Secretary of State. Sole proprietorships do not have to register with the state. Make sure to adhere to any state and federal laws regarding this type of business.
  5. Obtain a Surety Bond: As discussed earlier, the bond amount will vary depending on the license classification and the contemplated volume of work. 
  6. Submit the Application, Fees, and Additional Documents: Fill out the application and submit it, along with all the other required documents and fees. 

This is only a brief description of the steps required to obtain a license. Arizona’s Registrar of Contractors provides further information.