Contractor’s License Requirements in Nebraska

  • Home
  • Contractor’s License Requirements in Nebraska

In this article we will review the requirements you need to obtain a contractor’s license in the state of Nebraska.

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 Nebraska contractor license bond needs.

What Contractor Licenses Are Issued in Nebraska?

Nebraska’s Department of Labor licenses general contractors through its online portal, though the process technically is referred to as registration rather than licensing. Electricians are also licensed at the state level, while plumbers are licensed locally. Some Nebraska counties and municipalities require general contractors and specialty contractors to be licensed locally even though they may already hold a state license. 

What Are the Steps in the Licensing Process?

There are a few things you may need to do before applying for a contractor’s license of any kind. For example, you’ll need to register your new business with the Nebraska Department of Revenue and obtain a Nebraska tax ID number. You’ll also need to obtain an unemployment insurance number and purchase liability insurance and, if you have even one employee, workers’ compensation insurance as well. The one thing you won’t have to do is take an exam to become a general contractor.

You may, however, have to purchase a Nebraska contractor license bond if you are applying for a local license. 

Why is a Contractor License Bond Required?

When a contractor’s license bond is required, it’s for the protection of the licensing authority (known as the bond’s “obligee”) and the contractor’s clients. By purchasing the bond, the contractor (referred to as the “principal”) is pledged to abide by all applicable local ordinances and building codes. Any violation that results in financial harm to the obligee or a client gives the injured party the right to file a claim for damages and be compensated for the loss.

The third party to a Nebraska contractor license bond, a legally binding contract, is the “surety.” The surety is the bond’s guarantor, specifically guaranteeing that the principal will pay all valid claims.

How Are Contractor License Bond Claims Paid?

The terms of a Nebraska contractor license surety bond agreement legally obligate the principal to pay all claims that the surety finds to be valid. Nevertheless, it’s typically the surety that will make the payment to a claimant, paying the claim on behalf of the principal. That does not relieve the principal of the obligation to pay; it merely means that the principal must repay the surety for the debt created by the surety’s initial payment of the claim instead of paying the claimant directly. Failing to repay the surety can result in the surety taking legal action against the principal.

How Much Does a Nebraska Contractor License Bond Cost?

The annual premium for a Nebraska contractor license bond is calculated by multiplying the required bond amount (established by the obligee) by the premium rate (set by the surety on a case-by-case basis). The surety’s main concern in assigning a premium rate to a bond applicant is the risk of not being repaid for claims paid on the principal’s behalf. So the primary underwriting factor is the principal’s personal credit score, which is generally accepted as proof of an individual’s creditworthiness.

There is an inverse relationship between credit score and premium rate. A high credit score indicates low risk and results in a low premium rate. A low credit score, on the other hand, is associated with a higher risk level and warrants a higher premium rate. The range of possible premium rates generally runs from a low of 1% to a high of 3%. 

Get A Quote

Our surety bond professionals will get you the Nebraska contractor license bond you need at a competitive rate.