arizona contractor license

Demystifying Contractor Bonds: FAQs

With a market share of approximately 10%, the United States has the second largest construction market in the world. The construction industry is so massive that regulating it is a formidable task. Regulatory laws vary around the United States, but contractor license bonding is a national process that can be a little confusing.

As we mentioned, contractor bonding differs per state. We work specifically with the Arizona Registrar of Contractors and the Nevada State Contractors Board, but across the country, the intent behind contractor bonding is largely the same.

Let’s unpack some frequently asked questions.

What Is A Contractor Bond?

A contractor bond acts as an agreement between three parties. Between the contractor, the entities the contractor is completing work for, and the legislative body issuing the bond. The agreement ensures accountability between all parties. It’s a mark of professional confidence for contractors. It protects the public, as well. Should a bonded contractor’s work be below the standards or against regulations set forth by the bond, the bonding agency pays for any damages incurred. The contractor, in turn, owes that money back to the issuing agency.

Why Should I Become Bonded?

Becoming bonded is a mark of quality in the contracting profession. You’re publicly informing potential customers that you’re confident in the quality of work you’ll perform for them. There have been horror stories of people being ripped off by contractors who weren’t bonded and there being little to no recompense for the ripped off parties. People look for bonded contractors because it’s a safety net in the case of poor building practices.

Which Bond Should I Opt For?

An Arizona contractor license will look different from other states. Even within the state, there are various types of different contractor bonds and values that really have to do with the type of contracting work you’ll be doing. For instance, the Arizona contractor licenses are based on the scope and size of work, specialty versus general contracting, and residential/commercial contracting. Which you opt for depends entirely on what work you do as a contractor.

Arizona contractor bonds and Nevada contractor bonds may have different hoops to jump through, but now you can see why becoming bonded would be beneficial for your contracting business. It ensures professional service and provides coverage to the people who hire contractors that perform work that breaks the bond agreement.