Quick Facts:

  • Regulating Agency: Michigan Department of Licensing and Regulatory Affairs (LARA)
  • Required Bond Amount: Varies by location (most state licenses don’t require bonds; local bonds range from $1,000-$50,000)
  • Cost Range: $90-$500 annually (depending on credit)
  • Required For: Primarily city/county contractor registrations and specialty trades

What Is a Michigan Contractor License Bond?

A Michigan contractor license bond is a surety bond that serves as a financial guarantee that a contractor will comply with state laws, local ordinances, and fulfill their contractual obligations. These bonds protect the public by providing compensation if a contractor violates license laws or performs poor workmanship. Unlike some states, Michigan’s bonding requirements are primarily at the local level rather than state-level.

Who Regulates Michigan Construction Contractor Licensing?

  • The Michigan Department of Licensing and Regulatory Affairs (LARA) regulates state-level contractor licensing for residential builders, specialty trades, and various contractor categories.
  • Link to official site: Michigan LARA Contractor Licensing
  • However, most bond requirements come from local city or county authorities rather than the state regulatory agency.

What Bond Amount Is Required in Michigan?

  • State level: Most state licenses (Residential Builder, Electrical, Plumbing, HVAC) do NOT require a bond
  • Exception: Security Alarm Contractors need a $25,000 state bond
  • Local level: Bond amounts vary by municipality:
    • Major cities: Detroit ($2,500-$50,000), Grand Rapids ($5,000-$10,000), Flint ($5,000)
    • Bond amounts for specialty trades range from $1,000 to $50,000 depending on location and trade

How Much Does a Contractor Bond Cost in Michigan?

  • Typical range: $90-$500 annually
  • Small bonds ($1,000-$5,000): Usually around $90-$100 per year (minimum premium)
  • Medium bonds ($10,000-$25,000): Approximately $100-$225 annually with good credit
  • Larger bonds ($50,000): Roughly $225-$500 annually with good credit
  • Factors affecting cost:
    • Credit score (most important factor)
    • Financial strength of your business
    • Years in business
    • Industry experience
  • Contractors with poor credit may pay higher rates (5-10% of bond amount)

Who Needs a Contractor License Bond in Michigan?

  • State level: Most general contractors don’t need a bond for state licensing
  • Security Alarm Contractors: Need $25,000 state bond
  • Local level: Many municipalities require bonds for:
    • General contractors registering to work locally
    • Specialty contractors (demolition, excavation, etc.)
    • Contractors working in public right-of-way
    • Examples by city:
      • Detroit: Wrecking contractors ($50,000), sidewalk builders ($2,500), fire repair contractors ($5,000)
      • Grand Rapids: Sidewalk contractors ($10,000), water service contractors ($5,000)
      • Lansing: Demolition contractors ($10,000)
      • Flint: General contractors ($5,000)

What Other Contractor Bonds Are Required in Michigan?

  • Right-of-Way/Street Opening Bonds: Required by many cities (Ann Arbor, Flint, etc.) for work affecting public property
  • Sidewalk Contractor Bonds: Required in Detroit ($2,500), Grand Rapids ($10,000), Warren ($1,500)
  • Utility Connection Bonds: Required for connecting to municipal water/sewer systems
  • Sewage Disposal Contractor Bonds: Livingston County requires a $25,000 bond
  • Performance Bonds: Often required for public construction projects (separate from license bonds)

How Does ContractorNerd’s Application Process Work?

  1. Complete our simple online application form
  2. Receive an instant quote based on your information
  3. Pay online securely for immediate bond processing
  4. Download your bond certificate immediately or receive by mail
  5. File the bond with the appropriate municipal authority

How Quickly Can I Purchase a Bond?

  • Most contractor license bonds can be issued instantly after completing our online application
  • Bonds under $25,000 typically qualify for our instant-issue program with good credit
  • Even larger bonds can usually be processed within 1 business day
  • Digital bond certificates can be downloaded immediately after approval

Who Files the Bond With the MI Authority Once It Is Purchased?

  • You (the contractor) are responsible for filing the bond with the appropriate authority
  • The bond must be filed with the specific city or county department requiring it
  • For example, Detroit bonds must be filed with the Buildings, Safety Engineering and Environmental Department
  • We provide complete filing instructions with your bond certificate
  • For certain bonds, we can handle the filing process for an additional service fee

How Are Claims Handled on a Michigan Contractor Bond?

  • If a contractor violates license laws or regulations, a claim may be filed against the bond
  • The claim process typically involves:
    1. The claimant (customer or municipality) files a complaint with the obligee
    2. The obligee investigates the complaint
    3. If valid, the surety pays the claim up to the bond amount
    4. The contractor must reimburse the surety company for any paid claims
  • Contractors are ultimately responsible for all claims paid on their bonds

Frequently Asked Questions (FAQ)

Can I get a Michigan contractor bond with bad credit?

Yes. While credit affects premium rates, we have programs for contractors with challenged credit. You may pay a higher premium (possibly 5-10% of the bond amount), but we can still secure the bond you need.

What happens if I don’t have the required bond?

Operating without a required bond can result in:

  • License suspension or revocation
  • Inability to pull building permits
  • Fines and penalties
  • Potential legal action by local authorities

How do bond renewals work?

  • Most contractor bonds in Michigan are one-year terms
  • We send renewal notices 30-45 days before expiration
  • Simple renewal process with potential premium adjustments based on updated credit
  • Continuous bonds are available in some jurisdictions

What’s the difference between a bond and insurance?

  • Bonds protect your customers and the requiring authority if you violate regulations
  • Insurance protects you and your business from losses
  • Both are necessary for proper business protection
  • Bonds are not insurance policies and don’t protect the contractor

Ready to Get Your Michigan Contractor License Bond?

Apply Now for an instant quote on your Michigan contractor bond

This guide is for informational purposes only and is not legal advice. Bond requirements may change at any time. Always verify current requirements with the specific authority requiring your bond.