A contractor license bond is a very important type of surety bond that actually serves a purpose with three different parties involved in a contractor project. This contractor’s license bond not only helps you as the contractor but helps others who could be involved and affected by unethical or costly business decisions. In Carlifornia contractor’s license bonds legally protect the following three parties: you, the contractor, the company who has hired you, and the state bond issuing agency.Surety bonds are an insurance policy for the party requiring the bonds, called the obligee. In most instances, the obligee is a government agency and the bond is in place to protect the government and its citizens. The obligee requires the principal (you) to obtain and pay for the surety bond (performance bond costs are reimbursed when included in the bid).
If a contractor experiences cash flow problems, the Surety may assist the contractor. If the contractor abandons the job, the Surety may replace the contractor. To get a surety bond, first you need to determine which bond you need, and there are thousands of different bond requirements throughout the United State. An example of the bond is customs bond which is an insurance policy that ensures that the United States government will be paid for your duties and taxes. The cost of bonds is like any type of insurance policy: you are buying a bond for a certain amount of coverage. However, the cost of the bonds differs between single-entry and continuous bonds.Insurance bond certificate is given after you have bought the bond and the certificate which guarantees that you will satisfy contractual obligations according to the terms of contracts you sign.