The California Contractor Disciplinary Bond is a surety bond that California contractors must get if they wish to reinstate a suspended contractor license. This bond exists as an additional layer of financial protection (in addition to the CSLB Contractor License Bond) for consumers against any contractor malpractices. The bond is an additional requirement for suspended contractors because they have a higher risk of breaking rules based on past behavior.
Some examples of these violations include:
A California Contractor Disciplinary cost depends on the total bond cost, premium rate, and the financial background of the individual. The premium rate typically falls within the 1% to 5% range of the bond amount, with a lower rate being offered to those with better credit scores. Therefore, for a $100,000 bond with a 4% premium rate, the cost to obtain the performance bond would be approximately $4,000. Typically, one can expect the cost of a CA disciplinary bond to cost between $750 to up to $10,000 for the most serious offenses.
The calculation for this expense is determined through the surety company and is shaped by several contributing factors established by the Contractors State License Board (CSLB). One major component is your credit score.Surety companies will heavily rely on a contractor’s credit score as a factor in the bond cost. Having a higher score can help you receive lower premium rates.
Some other factors insurance firms will consider when determining premium rate are the contractor's license history, license classification, and financial standing.
Note that disciplinary bonds typically have annual terms, meaning they must be renewed each year for as long as they are required. The premium is paid annually, and the bond must remain active by having it filed with the CSLB. Muti-year purchase options are available at a discounted annual rate.
To purchase a California Disciplinary Bond, you can contact an insurance agency and fill out an application by providing any necessary background and financial information. This includes: (Name, Email, Company Name, Bond Amount, Address, SSN).
Afterward, the surety agency will shop around on behalf of you to get you the best rate. It’s important to work with a surety broker because different surety companies specialize in different bonds. So by working with an agent you’d be able to get the best price from multiple carriers. Once the bond is purchased, the surety company will file the bond on your behalf with the CSLB.
A California Disciplinary Bond generally applies to contractors in California who have had their licenses suspended or revoked because of violations for licensing laws. These individuals need to obtain a disciplinary bond as part of the process to restore their contractor's license or to continue operating legally.
The CSLB requires a disciplinary bond to remain current and on file with the CSLB Registrar for at least two years. In some cases, the Registrar may require a longer filing period.
Also your firm’s license should still remain active while your bond is on file with the CLSB.
When purchasing a disciplinary bond, here are a few things to look out for to avoid your bond from being rejected by the CSLB:
A claim against a California Disciplinary Bond can happen if the contractor operates in a manner that breaks any CSLB rules. The specific actions that can result in a claim are different, based on factors like the type of bond and the precise criteria for your surety provider.
Some common scenarios that result in a claim against a California Disciplinary Bond include:
Remember that the surety company checks if the claims are real and covered by the bond. If they are, they pay the affected people up to the bond's limit. However, the bonded person has to pay back the bond company for all the claims and legal fees.
Yes, the CA disciplinary bond needs to be renewed upon expiry. If you bought the bond through us, we’ll give you a call and send you a notice 90 days ahead of your bond expiration date so you can be on top of things.
