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Bond Rates

5 June 2014

Bond rates have have gone down recently or rather, the cost of license bonds for lower credit scores has softened up. If your credit score is below 650 you should qualify for a better price on your license bond than in recent prior years. 

11 Jan 2011

Lately it may seem that bond rates have gone up. Since the market crashed a lot of contractors have lost points on their credit score. License bonds are priced almost exclusively on credit score. I say 'almost' because other factors can have a negative effect on the bond rate. Factors such as prior claims on a bond, bankruptcy, and disciplinary action by the license board.

Most contractors however have never had a claim on their bond and even fewer have had disciplinary actions by the license board. Since the market crash bankruptcies are more common than either of these other two. By far the main factor in higher license bond cost has been a reduction in the contractors credit score.

This table will give you a rough idea of how your bond rate is affected by your credit score.

Credit Score 1yr approximate cost
660 and up $100 to $130
548-659 $250 to $655
Below 548 $1,284 to $1850
495 and lower


It can be quite a shock to see your bond cost go from $100 to $1350 in a single year. Here are some tips to help keep you license bond cost as low as possible.

  • If your credit is good purchase as many years of license bonding as you are allowed. Some companies offer up to 5 years and they give discounts for multiple years.
  • If your bond cost has shot up make sure your broker has tried other markets. I have seen instances where one carrier quoted $1850 and another quoted $1284. That is quite a difference.
  • Ask Venture Insurance Services to do your bond and mention this article. We will give you a 10% rebate on your bond. Be sure to contact us at least 30 days before your bond renewal date to ensure that we can give you the rebate.

Feel free to call our office with any questions about your bond.

We also offer an instant rater for your bonding.


License Bond Estimate

Standard Market Requirements:Numerous factors are considered when underwriting a commercial surety bond. Below you will find basic requirements in order of importance.

  • Credit Score:650 or higher
  • Claims:None prior
  • Experience:3 years or more
  • Personal Financials:Net worth 1-3x bond amount

Standard Market Estimate:$110 to $375

If you do not meet the requirements above, it is possible, but not likely to be approved in a standard market. If that is the case, we would see if you qualify for a high risk market. The requirements for high risk markets are much looser, which allow us to approve 99.9% of applicants.

  • Claims:No losses paid by surety
  • U.S. Citizen:Yes

High Risk Estimate:$500 to $1,875

*The above is not an actual offer, but an estimate of what your quote may be should you qualify. To obtain an approval quote, you need tocomplete an application.

Venture Insurance Services
PO Box 469
Burbank, CA 91503



What is a contractor license bond for? What does a bond do? These are common questions regarding contractor's license bonds. The purpose of a license bond is to protect the public against fraud. The bond acts as a guarantee to the state license board (CSLB in California) that the contractor will abide by the terms of his license. It is a promise by the contractor that he will follow the laws and regulations that apply to his license.

There are several types of bonds. Each of the is a guarantee of either performance, payment or some other "obligation".  The one most familiar to contractors is the License Bond. The license bond is a contract where in the surety (bond company) promises the state that the contractor will conform to applicable laws. In California this refers to the Contractors' State License Law (CSLL). Other states would have similar laws.

A bond is not insurance because the liability or risk, is not transferred to the surety company. The person obtaining the bond is still liable for damage or loss. If the surety is required to pay a claim they will in turn act  to collect the claim amount from the person that purchased the bond. The bond is simply a guarantee regarding some "obligation".

You can read a more detailed description about license bonds from the California Contractors State License Board. Scroll down to  "A Guide to Contractor License Bonds"

You can download a License bond application here if you have acceptable credit.  If your credit is poor then you will need to download a different form here .

A Payment and Performance Bond (P & P Bond) and its related Bid bond is another common type of bond that a contractor may need on commercial or public works projects. When working for a school district or government agency a P & P bond is often required. A Performance Bond guarantees that the work will be "performed" or completed. A Payment Bond guarantees that the subcontractors will be paid. These two types of bond are usually sold together. 

A contractor's bond is a financial assurance that a contractor will complete a job to satisfaction. The Payment and Performance bond guarantees that the project will be completed and that the subs will be paid for work they perform. If a contractor walks off a job or fails to complete it, the bond would cover this. When a contractors gets qualified for a P & P Bond he can then obtain a Bid bond for specific projects. The bid bond is a statement by the surety that they are willing to issue a bond in the amount stated on the bid bond. Bid bonds are inexpensive but it sometimes takes a lot of paperwork to get qualified for a bond.

A Bid Bond guarantees that the contractor will honor the bid the he provides for a particular project and that he will sign the contract if he wins the bid. In order to obtain a Bid Bond the Surety company will first ensure that they are willing to provide the Payment and Performance Bonds. The sequence is to qualify the contractor for a specific amount and they Bid Bonds can be provided up to the amount that the contractor has been approved for. 

We offer California Contractors License Bonds and Arizona Contractors Bonds and we provide FAST service.

Venture Insurance Services has access to bond markets that can issue a bond for up to $400,000 based on a credit check. This is by far the fastest way to obtain a P & P Bond. You can download the application here.

Venture Insurance Services
124 E Olive Ave. 
Burbank, CA 91502 

FastTrack Bond

The FastTrack bond is for Payment and Performance bonds. This would be stuff like a contractor doing work for one of the Unified School Districts or on some commercial jobs. The rate is generally 3% of the job so a $100,000 job would cost $3,000 for a P & P bond.

When a contractor needs a "bid" bond it is to ensure that he is qualified to obtain a P & P bond for the amount of the bid. It is the same form and process to qualify one for a bid bond but the bid bonds are really cheap since they are not an actual bond but a statement that the contractor is bondable. These run anywhere from $50 to $150 each.

The purpose of a Payment and Performance bond is to guarantee that the job will be completed.  

Contractor Classifications


A general engineering contractor is a contractor whose principal contracting business is in connection with fixed works requiring specialized engineering knowledge and skill, including the following divisions or subjects: irrigation, drainage, water power, water supply, flood control, inland waterways, harbors, docks and wharves, shipyards and ports, dams and hydroelectric projects, levees, river control and reclamation works, railroads, highways, streets and roads, tunnels, airports and airways, sewers and sewage disposal plants and systems, waste reduction plants, bridges, overpasses, underpasses and other similar works, pipelines and other systems for the transmission of petroleum and other liquid or gaseous substances, parks, playgrounds and other recreational works, refineries, chemical plants and similar industrial plants requiring specialized engineering knowledge and skill, powerhouses, power plants and other utility plants and installations, mines and metallurgical plants, land leveling and earthmoving projects, excavating, grading, trenching, paving and surfacing work and cement and concrete works in connection with the above mentioned fixed works.



Section 7057(a) broadly defines general building contractor as a contractor whose principal business is in connection with any structure built, being built, or to be built, requiring in its construction the use of at least two unrelated building trades or crafts; however, framing or carpentry projects may be performed without limitation. In some instances, a general building contractor may take a contract for projects involving one trade only if the general contractor holds the appropriate specialty license or subcontracts with an appropriately licensed specialty contractor to perform the work. 

 For a complete list check here .

 Prime vs. Subcontractor

 The Contractors State License Board (CSLB) makes the following distinction, "A prime contract is a contractual relationship made between the owner of the property and the contractor. A subcontract is when the contractor does not have a direct contractual relationship with the owner of the property. For example, the subcontractor contracts with the prime contractor."

 Find out more here .


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