Every contractor must be licensed with the State of California Contractor’s License Board for all contract work performed in the State in excess of $500.00 in contract total (inclusive of labor and materials). A contractor is bound to legally operate under California Civil Code Division 3, Chapter 9 (Commencing with Section 7000 of the Business and Professions Code). As such, a valid contractor’s license must be accompanied by a surety bond. According to Business and Professions Code Section 7071.6, all contractors must have either a bond or equivalent cash deposit on file with the California State Contractor’s License Board (CSLB).
The penal sum of the contractor’s license bond shall be equivalent to the following:
· $100,000 for LLC’s
· $12,500 for qualifying individual bonds
· $15,000 for all other licensees
The California Contractor’s License Bond guarantees that individuals granted a license or permit to operate a business or to exercise a privilege will meet the obligations as stated in the California Business and Professions Code Division 3, Chapter 9, commencing with Section 7000. It ensures that the contractor will comply with the Contractors’ State License Law for which the law describes specific violations that the bond will cover. If the contractor does not comply with the conditions of the bond, a consumer, supplier or an employee may file a claim against the bond. The Surety Company who issued the contractor’s license bond on behalf of the contractor must validate each claim and in the event the contractor is found negligent, the Surety Company must pay the damages sought in the bond claim. Consumers, suppliers and employees of the licensed and legal contractor in the State of California are entitled to make a claim against the contractor’s surety bond should they act in violation of the Contractors’ State License Law.