The bond amounts for the California contractor license bond and the California qualifying individual bond are increasing to $25,000 starting on January 1, 2023. This means that all contractors who hold active licenses in the state of California will need surety bond increases processed to keep their contractor licenses in good standing with the state.
Here's what you need to know about the bond increases in California.
How Do You Increase California Contractor Bonds?
It all depends on the insurance carrier that issued your bond. Some insurance carriers are accounting for the premium increase by shortening the original bond term to avoid generating invoices for an additional premium. If this is how your carrier handles your increase, your existing contractor bond will come up for renewal earlier than you originally anticipated.
Other insurance carriers are processing the increase by charging an additional premium to keep the original bond term unchanged. If this is how your carrier handles your increase, you should pay your additional premium invoice as soon as possible so your bond term remains unchanged.
Pay your increase invoice before you miss the deadline, your original bond term may be shortened or possibly canceled to account for the unpaid premium.
Does the Bond Increase Affect Renewal Dates?
The increase in bond amounts will not affect your renewal process, but your bond's current term may be shortened to account for the bond amount and premium increases. Whether your bond term changes or stays the same as part of this increase, your surety provider will contact you before your current bond term ends to ensure your bond remains active for its next renewal term.
Who Enforces Contractor Bonds?
The California Contractors State License Board (CSLB) is the regulatory agency that enforces license and bond requirements for contractors working in the state. You can call their 24-Hour Licensing and Consumer Information line at 1(800)321-2752 if you have any questions about your current surety bond or professional license status.
Why Are Contractor Bonds Increasing?
You might be wondering why the CSLB increased the contractor bond amount. A study of Business and Professions Code section 7071.6 concluded that the current bond amounts no longer offered sufficient consumer protection. Increasing the bond amount helps protect consumers from potential damages caused by a contractor's work.
When Does the Increase Take Effect?
All California contractor license bonds and qualifying individual bonds issued with an effective date of January 1, 2023, or later must be filed with the new $25,000 bond amount.
Remember, having an active and sufficient surety bond is crucial to maintaining your contractor license in California. Make sure you're prepared for this increase by contacting your surety provider, paying any additional premiums, and renewing your bond before it expires.
For more information about contractor bonds in California or to increase your bond amount, contact the contractor bond professionals at Aegis Insurance Markets today.