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Electrical Contractor Surety Bonds
What is an electrical contractor bond?
In order to legally work as an electrical contractor in many states across the U.S., you are required to have a license. Part of this licensure process typically involves acquiring a surety bond.
An electrical contractor bond works like other types of surety bonds. In essence, the surety bond is a contract between three parties:
- The principal: you, the electrician.
- The obligee: the state board or authority requiring the surety bond.
- The surety: the company issuing your bond.
Why do electricians need a bond?
Most states will not grant an electrician or contractor a license without having first obtained a surety bond.
This is because the bond helps protect consumers from electrical contractors who do not follow state regulations or who default on a court ordered judgment.
In either event, a consumer can make a claim against the electrician's bond and, if the claim is upheld, the surety company will pay them for losses. As the contractor, you will then be required to pay back the bonding company.
In this way, a surety bond encourages adherence to state laws and regulations while promoting consumers' confidence in your electrical contracting services.
How much do electrical contractor bonds cost?
The price for this bond will vary depending on several factors, most notably:
- The credit rating of the electrical contractor obtaining the bond.
- The bond amount required by the licensing state.
The biggest factor in determining how much a surety bond will cost is the bond amount your state licensing board requires. This number can vary widely. For example:
- In New Jersey, electrical contractors are only required to obtain a $1,000 bond.
- In Minnesota, contractors must be bonded in the amount of $25,000.
The bond amount needed in Washington D.C. varies depending on the license type the electrical contractor has.
| Type of License | Bond Amount |
|---|---|
| Electrical Contractor | $4,000 |
| Electrical Contractor Specialist (Low Voltage) | $2,000 |
| Designated Master Electrician | $2,000 |
| Designated Master Electrician Specialist (Low Voltage) | $1,000 |
Regardless of the surety bond amount, you will only have to pay an annual fee that is a small percentage of the full coverage limit in order to obtain a policy. This is referred to as the bond’s premium.
Premium rates may vary based upon your credit, and they can range from 1% to 15% of the total bond amount. NNA Surety Bonds offers electrical contractor bonds in several states with premiums as low as $50.
| State | Bond Amount | Cost (Annual Premium) |
|---|---|---|
| Minnesota | $25,000 | $219* |
| New Jersey | $1,000 | $50 |
| Washington | $4,000 | $100 |
| Washington D.C. | $1,000-$4,000 | $175 (two years) |
* Cost can vary depending on the bond amount required and your credit rating
How to get an electrical contractor bond
NNA Surety Bonds provides policies for electricians in the following states: Minnesota, New Jersey, Washington, and Washington D.C.
Applying for your bond is simple. Begin the process today by using our short online form to receive a free bond quote.
If you have questions about the bonding requirements for your electrical contracting business, our experts will be happy to assist you! Give us a call at 855-215-2160.