Quick Facts:

  • Regulating Agency: South Dakota State Electrical Commission (for electrical contractors) and local city authorities
  • Required Bond Amount: $1,000-$20,000 (depending on contractor type and location)
  • Cost Range: $100-$500 annually (depending on credit)
  • Required For: Electrical contractors, specialty trade contractors, and various city-licensed contractors

What Is a South Dakota Contractor License Bond?

A South Dakota contractor license bond is a surety bond that guarantees a contractor will comply with state and local laws, codes, and contractual obligations. If the contractor violates regulations or fails to complete work properly, a claim can be made against the bond to compensate for damages. Unlike insurance (which protects the contractor), these bonds protect consumers and government entities.

Who Regulates South Dakota Construction Contractor Licensing?

South Dakota takes a unique approach to contractor regulation, with licensing primarily handled at the local level:

  • State Level: The South Dakota State Electrical Commission regulates electrical contractors and Class B electricians
  • Local Level: Individual cities (Sioux Falls, Aberdeen, Brookings, Pierre, etc.) handle most other contractor licensing
  • Department of Revenue: Oversees Contractor’s Excise Tax licensing

Official site (Electrical): https://dlr.sd.gov/electrical/ Sioux Falls Contractor Licensing: https://www.siouxfalls.gov/business-permits/permits-licenses-inspections/licensing/contractor-licensing

What Bond Amount Is Required in South Dakota?

South Dakota’s contractor bond requirements vary by license type and location:

State-Level Bonds:

  • Electrical Contractors/Class B Electricians: $10,000 bond
  • Contractor’s Excise Tax License: $1,000-$50,000 (varies based on expected tax liability)

Local-Level Bonds (Major Cities):

  • Sioux Falls:
    • Residential Building Contractors: $20,000
    • Electrical, Plumbing, Mechanical, and Specialty Contractors: $10,000
  • Aberdeen:
    • Sign/Advertising Contractors: $10,000
    • Water & Sewer Contractors: $10,000
    • Excavation Contractors: $5,000
    • Sidewalk Contractors: $5,000
  • Brookings:
    • Plumbing Contractors: $1,000 (with insurance) or $5,000 (without insurance)
  • Pierre:
    • Plumbing Contractors: $1,000
  • Brandon:
    • Building Contractors: $10,000

Other cities may have additional or different bond requirements.

How Much Does a Contractor Bond Cost in South Dakota?

Contractor bond premiums in South Dakota typically range from 1-5% of the bond amount annually:

  • Typical Cost Range: $100-$500 per year
  • Most Common Cost: Around $100 for bonds up to $10,000
  • Larger Bonds: $20,000 Sioux Falls residential bond costs approximately $100-$200

Factors affecting cost:

  • Credit score (better credit = lower premium)
  • Business financial strength
  • Experience in the industry
  • Bond amount required
  • Claims history

Many smaller bonds ($10,000 or less) hit the minimum premium of approximately $100 regardless of other factors.

Who Needs a Contractor License Bond in South Dakota?

Bond requirements depend on where you work and what type of contracting you do:

State-Level Requirements:

  • Electrical contractors and Class B electricians
  • Contractors required to post an excise tax bond (typically corporations/LLCs)

City-Level Requirements (examples):

  • Sioux Falls: All licensed contractors (residential building, electrical, plumbing, mechanical, fire alarm, sign wiring, irrigation, fireplace, refrigeration, manufactured home plumbing, sign & outdoor advertising)
  • Aberdeen: Sign/advertising contractors, excavators, water & sewer contractors, sidewalk contractors
  • Brookings: Plumbing contractors
  • Pierre: Plumbing contractors
  • Brandon: Building contractors

What Other Contractor Bonds Are Required in South Dakota?

Beyond license bonds, contractors may need:

  • Right-of-Way Bonds: Required when working on public roads or utilities
  • Performance Bonds: For public construction projects
  • Payment Bonds: For public construction projects to guarantee payment to subcontractors and suppliers
  • Utility Connection Bonds: Required by some municipalities

Most contractors should also carry liability insurance and workers’ compensation insurance. For example, Sioux Falls requires residential contractors to carry $300,000 in general liability insurance in addition to their bond.

How Does ContractorNerd’s Application Process Work?

Getting your South Dakota contractor bond is straightforward:

  1. Complete the application: Provide basic information including the bond amount, obligee name (city/state agency), and your business details
  2. Credit check: A soft credit inquiry determines your rate
  3. Receive quote: Get an instant rate quote based on your application
  4. Purchase bond: Pay online with credit card or ACH
  5. Receive bond: Your bond certificate is typically issued within 24 hours

Our partners handle the details so you can focus on your business.

How Quickly Can I Purchase a Bond?

Most South Dakota contractor bonds can be issued immediately or within 24 hours. Our system provides instant quotes, and bonds can typically be purchased online in minutes, with digital delivery available for most bond types.

Who Files the Bond With the SD Once It Is Purchased?

After purchasing your bond, you (the contractor) are responsible for filing it with the appropriate licensing authority. The bond will be issued to you, and you must submit it along with your license application or renewal to:

  • Electrical Bonds: South Dakota State Electrical Commission
  • Local Bonds: City finance office, building department, or licensing authority
  • Excise Tax Bonds: Department of Revenue

Some bonds require original documents with wet signatures and notarization, while others accept digital copies. Our partner can provide guidance specific to your bond’s filing requirements.

How Are Claims Handled on a South Dakota Contractor Bond?

If you fail to comply with applicable laws or complete work properly, a claim may be filed against your bond:

  1. The obligee (state/city) or consumer submits a claim to the surety
  2. The surety investigates the claim’s validity
  3. If valid, the surety pays the claim up to the bond amount
  4. You must reimburse the surety company for all paid claims

For example, if an electrical contractor abandons a project with code violations, the Electrical Commission could claim against the bond to cover the cost of corrections.

Frequently Asked Questions (FAQ)

Can I get a bond with bad credit? Yes, contractors with less-than-perfect credit can still obtain bonds in South Dakota. While premium rates may be higher (potentially 3-5% of the bond amount), the relatively small bond amounts ($10,000-$20,000) make even higher-rate premiums manageable.

What happens if I don’t have a required bond? Operating without a required bond is illegal and can result in:

  • License denial or revocation
  • Inability to pull permits
  • Fines or penalties
  • Ineligibility for certain projects

When do I need to renew my bond? Most South Dakota contractor bonds run concurrently with your license term:

  • Annual bonds typically expire December 31
  • Multi-year bonds match the license period
  • Always renew your bond before its expiration to maintain continuous coverage

What’s the difference between a bond and insurance?

  • Bonds: Protect the public and regulatory agencies against contractor non-compliance
  • Insurance: Protects the contractor against accidental damage or injuries

Both are typically required, serving different purposes.

Ready to Get Your South Dakota Contractor License Bond?

Apply Now for an instant quote and same-day bonding service. Our partners specialize in contractor bonds for all South Dakota cities and can help you secure the exact bond you need at competitive rates.