Operating as a general contractor in Tennessee requires proper licensing and insurance. This guide provides an overview of the steps to obtain a new general contractor’s license in Tennessee, as well as key requirements for license renewal, reciprocity with other states, license bonds, and insurance.

Introduction

In Tennessee, a general contractor is considered any person or company that oversees or carries out construction, repair, or installation projects costing $25,000 or more. This applies to work on buildings, land, highways, public utilities, and more.

To legally operate as a general contractor in the state, individuals and companies must hold a valid Tennessee contractor’s license. Licenses are issued by the Tennessee Department of Commerce and Insurance’s Board for Licensing Contractors.

There are several steps involved in securing a new general contractor’s license in Tennessee. Key requirements include:

  • Proof of experience
  • Passing required exams
  • Providing a financial statement
  • Holding proper insurance
  • Meeting license bond requirements

General contractors must also renew their license regularly and have the option of seeking reciprocity with Tennessee if they hold a license from another state.

New License Requirements

To obtain a new general contractor’s license in Tennessee, the following steps must be completed:

1. Establish Eligibility

To be eligible for a general contractor’s license in Tennessee, you must:

  • Be at least 18 years old
  • Be a U.S. citizen or legally authorized to work in the country
  • Not have any disqualifying criminal convictions
  • Provide proof of experience:
    • 5 years if applying for a unlimited building license
    • 3 years for a limited license up to $1,500,000
    • 1 year for a license up to $500,000

2. Pass Required Exams

Tennessee requires general contractor license applicants to pass 2 exams:

  • Business and Law Exam – Covers business organization, estimating, finance, taxes, lien laws, labor laws, and more. Required for all applicants.
  • Trade Exam – Covers trade-specific knowledge relevant to the types of contracting work to be performed. Required for major trade classifications.

The exam fee is $55 per exam. Exams are administered by PSI Exams.

3. Submit a Financial Statement

Applicants must provide a financial statement prepared by a licensed CPA. This is used to determine the monetary limit assigned to the license. Limits range from $500,000 to an unlimited amount.

4. Show Proof of Insurance

General liability insurance and workers’ compensation insurance are required. Make sure workers’ comp covers employees working in Tennessee.

5. License Bond

General contractors in Tennessee must obtain a $10,000 license bond to compensate consumers in case of contractor default.

6. Apply and Pay the Fee

Once all requirements are met, submit a completed license application along with a $250 application fee.

It takes 4-6 weeks to receive a new license after submitting a completed application. Do not bid on or contract for projects over $25,000 until the license has been issued.

License Renewal

General contractor’s licenses in Tennessee must be renewed every 2 years. To renew, contractors must:

  • Submit a renewal application
  • Pay a $250 renewal fee
  • Provide an updated financial statement
  • Show proof of continued insurance coverage
  • Verify any new business information
  • Complete 12 hours of continued education (CE) credits

CE courses must cover building code, business practices, construction practices, laws, taxes, safety, or accounting. At least 2 hours must be on worker safety. Courses are offered by various providers.

Reciprocity

Tennessee has license reciprocity agreements with several states, including AL, AR, GA, LA, MS, NC, OH, SC, WV. This allows for the trade exam to be waived for contractors licensed in those states.

However, the Tennessee Business and Law exam will still be required. All other license requirements also apply, such as providing a financial statement, proof of insurance, and meeting experience qualifications.

To get a Tennessee license through reciprocity:

  • Verify your out-of-state license is current and in good standing
  • Obtain license verification from your state licensing board
  • Submit the verification with your completed Tennessee application and $250 fee

License Bonds

All licensed general contractors in Tennessee must carry a $10,000 license bond. This is meant to protect consumers by providing compensation if a contractor fails to complete work or comply with contracts.

The surety bond must name the licensee and identify all owners, partners, or officers of the business. The State of Tennessee must be listed as the obligee.

Evidence of a valid bond must be submitted with new license applications and renewals. Bonds can be obtained from insurance providers and brokers.

Insurance Requirements

Tennessee requires licensed contractors to carry general liability insurance and workers’ compensation insurance.

General liability insurance covers property damage and bodily injury caused by the contractor. Typical minimum limits are $100,000 per occurrence and $300,000 aggregate.

Workers’ compensation insurance is mandatory for contractors with 5 or more full-time employees. This covers medical bills and lost wages for employees injured on the job. Verify the policy provides coverage for employees working in Tennessee.

Certificates of insurance must be submitted as part of license applications and renewals. Insurance can be obtained from agents, brokers, and directly from insurance companies.

Conclusion

Operating legally as a general contractor in Tennessee requires following key steps to obtain proper licensing, insurance, and bonds. Contractors must also renew their license every 2 years and have the option of seeking reciprocity.

Following Tennessee’s licensing and insurance rules allows general contractors to run their business in compliance with regulations meant to protect public safety and welfare. This helps support a fair marketplace for both contractors and their customers.