Quick Facts:
- Regulating Agency: Virginia Department of Professional and Occupational Regulation (DPOR) – Board for Contractors
- Required Bond Amount: $50,000 (for Class A and B contractors who don’t meet financial requirements)
- Cost Range: $219-$500+ annually (depending on credit)
- Required For: Class A and B contractors who cannot meet net worth requirements; various local contractor licenses
What Is a Virginia Contractor License Bond?
A contractor license bond is a type of surety bond that contractors may be required to post as part of obtaining a license. In Virginia, this bond serves as a financial guarantee that the contractor will comply with state and local laws and fulfill their contractual obligations. The bond protects the public and consumers by providing a source of compensation if a licensed contractor commits fraud, violates regulations, or fails to complete a project properly.
Importantly, this bond is not insurance for the contractor, but rather a form of protection for clients and the public – the contractor remains responsible to repay any claims paid out by the surety.
Who Regulates Virginia Construction Contractor Licensing?
All contractors in Virginia performing work over a minimal amount must be licensed by the state’s Department of Professional and Occupational Regulation (DPOR), specifically under the Board for Contractors.
Virginia issues three classes of contractor licenses based on project size:
- Class A: For the largest projects (single contracts of $120,000 or more, or $750,000+ in a 12-month period)
- Class B: For mid-sized projects ($10,000 up to <$120,000, or $150,000 up to <$750,000 in a year)
- Class C: For smaller jobs ($1,000 up to <$10,000, with annual work under $150,000)
Official Website: Virginia DPOR Board for Contractors
What Bond Amount Is Required in Virginia?
Virginia does not mandate a blanket surety bond for every contractor license; however, Class A and Class B license applicants must either demonstrate financial responsibility or post a bond.
In lieu of providing a financial statement showing the required net worth ($45,000 for Class A and $15,000 for Class B), an applicant for a Class A or B contractor license may elect to purchase a $50,000 surety bond.
Additional Requirements:
- Many local jurisdictions in Virginia impose their own contractor licensing or permitting bonds. These are separate from the DPOR bond and typically apply to certain types of contractors or specific scopes of work within a city or county.
- Local contractor bond requirements typically range from $1,000 to $50,000 depending on the jurisdiction and type of work.
How Much Does a Contractor Bond Cost in Virginia?
Contractors do not pay the full bond amount up front; instead, you pay a premium, which is a fraction of the bond’s value.
Typical Pricing:
- A $50,000 contractor license bond can cost around $219 per year (approximately $438 for a required two-year bond term) for applicants with good credit.
- Premium rates typically range from about 1% up to 10% of the bond amount depending on credit score and other factors.
- For smaller local bonds (e.g. $5,000 or $10,000), many surety companies offer flat low rates – often around $100 per year (which may be a minimum premium).
Factors Affecting Cost:
- Surety companies will perform a credit check (and sometimes a broader financial review) on the contractor or the business owners when underwriting the bond.
- A higher credit score and solid financials usually result in a lower premium because the surety sees less risk that a claim will be filed or that the contractor will default on reimbursing claims.
- Business experience and history
- Bond amount and term length
Who Needs a Contractor License Bond in Virginia?
At the state level, Class A or B contractors who cannot show the DPOR Board that they meet the net worth/equity requirement are required to file a $50,000 Contractor License Bond before the license will be issued.
Class A bond requirements: Required if contractor cannot show $45,000 net worth Class B bond requirements: Required if contractor cannot show $15,000 net worth Class C contractors: Class C contractors are exempt from this bond requirement since their projects are below the threshold that triggers the financial responsibility rule.
All types of contractors – whether a general building contractor or a specialty trade contractor (e.g. electrical, plumbing, HVAC) – must comply with this $50,000 bond requirement if they hold a Class A or B license and choose the bond option instead of the net worth proof.
What Other Contractor Bonds Are Required in Virginia?
Many localities in Virginia require their own bonds. Some common examples include:
Home Improvement Contractor Bonds
Several counties (especially in Northern Virginia) require a Home Improvement Contractor (HIC) license for contractors doing small-scale residential projects, along with a surety bond. For instance, Fairfax County mandates that contractors performing home improvement work under certain dollar thresholds obtain a county HIC license and post a bond of $5,000 for jobs under $1,000, or $10,000 for jobs over $1,000.
Specialty Trade Contractor Bonds
Some counties and cities require trade-specific bonds for licensed tradespeople pulling permits or operating locally. For example, Arlington County requires certain trade contractors to post a $10,000 bond specific to their trade.
Municipal Contractor License Bonds
Beyond Northern Virginia, other cities have their own bonding rules. The City of Richmond requires contractors working within the city to post a contractor license bond (the amount is $50,000 in many cases). City of Portsmouth requires a general contractor license bond of $5,000 for contractors pulling permits there.
How Does ContractorNerd’s Application Process Work?
Getting bonded is a straightforward process:
- Apply online with basic business information
- Receive instant quote based on your information and credit
- Purchase your bond with a credit card or ACH payment
- Receive your bond documents electronically, usually within 24 hours
How Quickly Can I Purchase a Bond?
Contractors can typically receive quotes instantly and get their bonds issued within 24 hours. The process is even faster for applicants with good credit. Same-day service is available for most standard contractor bonds.
Who Files the Bond With the VA Once It Is Purchased?
After you have the bond in hand (the original bond document signed by the surety), you must submit it along with your license application. For a state contractor license, include the surety bond form in your application to DPOR (or to the Board for Contractors) if you checked the option to provide a bond in lieu of financial statements.
For local bonds: Follow the locality’s instructions: often, you will need to hand-deliver or mail the bond to the county’s permitting office.
Our bonding partner can provide guidance and assistance with the filing process, though the contractor is ultimately responsible for ensuring proper filing.
How Are Claims Handled on a Virginia Contractor Bond?
The bond must be continuous and can only be canceled with 30 days’ notice to the Board. If a claim is paid out on the bond, the contractor’s license could be affected, and they would be responsible for reimbursing the surety.
If the contractor fails to satisfy a valid judgment for damages due to improper or dishonest conduct, a claim can be made on the bond by the injured party as permitted under Virginia’s Contractor Transaction Recovery Act.
Frequently Asked Questions (FAQ)
Can I get a bond with bad credit?
Yes, contractors with credit challenges can still obtain bonds, though premiums will likely be higher. Premium rates typically range from about 1% up to 10% of the bond amount depending on credit score and other factors.
What happens if I don’t have a required bond?
Operating without a required bond can result in license suspension, penalties, and inability to pull permits. If you cancel your bond or let it expire while your license is still active, the state or locality may suspend or revoke your license – the bond is an ongoing requirement.
How do bond renewals work?
Contractor license bonds need to be renewed periodically. State license bonds in Virginia are generally tied to the two-year license cycle, so you would renew the $50,000 bond every two years (paying the renewal premium) before your license expiration.
What’s the difference between a bond and insurance?
Contractor license bonds are not insurance for the contractor, but rather a form of protection for clients and the public – the contractor remains responsible to repay any claims paid out by the surety. Insurance protects you, while bonds protect your customers.
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