Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Texas contractor license bond needs. Learn how to get a contractor’s license in Texas, below.
What Contractor Licenses Are Issued in Texas?
In Texas, plumbers and electricians are licensed at the state level. However, other specialty contractors and general contractors are licensed locally, and not all local jurisdictions require contractor licensing. Electricians are licensed by the Texas Department of Licensing and Registration (TDLR) and plumbers are licensed by the Texas State Board of Plumbing Examiners (TSBPE).
What Are the Steps in the Licensing Process?
There are several different types of licenses for electrical and plumbing contractors. Refer to the TDLR or TSBPE website for a description of the different types of electrical and plumbing licenses and the procedures for obtaining the one you may need. Applications may be submitted online through these sites.
Licensing requirements and procedures for specialty and general contractors vary by jurisdiction. You’ll need to check with the local government in the municipality where you plan to work to see how to get any necessary license. Although there is no statewide requirement for contractor license bonds, a number of local jurisdictions require applicants for licensure to purchase one as a prerequisite for obtaining a license.
Why Is a Contractor License Bond Required?
When a local contractor license bond is required, it serves these important purposes:
- It is the contractor’s guarantee to operate in a lawful and ethical manner, in compliance with local building codes and regulations.
- It protects clients and the municipality against financial loss due to a licensed contractor’s unlawful or unethical actions.
- It provides a way for an injured party to obtain compensation for such losses.
The required bond amount is established by the local licensing authority.
How Are Contractor License Bond Claims Paid?
The surety bond agreement for a contractor license bond is a legally binding contract between three parties:
- The local jurisdiction requiring the bond (the bond’s “obligee”)
- The contractor required to purchase the bond (the “principal”)
- The bond company authorizing the bond (the “surety”)
All surety bond agreements make the principal solely responsible for paying claims filed against the principal’s contractor license bond. However, in practice, the surety usually first investigates to make sure a claim is valid and then pays it on behalf of the principal. The principal is then legally obligated to repay that debt to the surety.
How Much Does a Texas Contractor License Bond Cost?
How much you will pay for a contractor license bond depends on the required bond amount (also known as the bond’s “penal sum”) established by the obligee and the premium rate assigned by the surety. That premium rate will depend largely on your personal credit score, which is how the surety assesses the risk involved in paying claims on your behalf.
With good credit, your premium rate should be in the standard market range of 1-2%. With bad credit, the premium rate may be higher.
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