What is a disciplinary bond?
If a California contractor’s license is suspended or they’ve violated the Contractor’s License Law, they must file a disciplinary bond. This must be done before their contractor’s license can be reinstated or reissued. A contractor must post this bond in addition to other required bonds.
A disciplinary bond guarantees that a contractor will comply with the licensing laws in the future and that any damages caused by their misconduct will be paid out. It acts as a safeguard for consumers and the regulatory body overseeing contractors by providing financial protection in case of contractor misconduct or violation of licensing regulations.
Learn more about recent updates to California contractor bond requirements on our blog.
Quick Takeaways
- If a California contractor’s license is suspended or they’ve violated the Contractor’s License Law, they must file a disciplinary bond.
- When you get a disciplinary bond, you’re agreeing to be held to a higher standard of conduct.
- The Registrar will determine the bond amount you need based on your specific violation(s).
- The amount will be at least $25,000 but no greater than $250,000.
What happens when you get a disciplinary bond?
When a contractor is required to obtain a disciplinary bond, it signifies that they’ve faced disciplinary actions or violated licensing regulations. The bond ensures the contractor’s financial obligations are met, such as compensating affected parties or fulfilling corrective actions.
When you get a disciplinary bond, you essentially agree to be held to a higher standard of conduct. If you violate the licensing laws again, the surety company could be called upon to pay damages to the public. This could have a significant financial impact on you, so taking your disciplinary bond seriously is essential.
When are these bonds required for contractors?
Disciplinary bonds are typically required when a contractor has violated licensing laws, such as engaging in fraudulent practices, theft, negligence, breaching contract terms, or failing to meet contractual obligations. The California Contractors State License Board (CSLB) may impose disciplinary bonds as a condition for license reinstatement or to continue operating as a contractor.
How is the bond amount determined?
The Registrar will determine the bond amount based on a contractor’s specific violation(s). The amount will be at least $25,000 but no greater than ten times the contractor’s license bond amount.
Frequently Asked Questions
The cost of a disciplinary bond depends on the bond amount required and the contractor’s financial history. Bond premiums are typically a percentage of the bond amount, ranging from 1% to 10%. Contractors with strong financial backgrounds and a good track record may receive more favorable premium rates.
The CSLB requires contractors disciplined for certain violations to post a disciplinary bond. The specific requirements for disciplinary bonds in California are as follows:
- The bond amount must be at least $25,000 and no more than ten times the contractor’s license bond amount ($250,000).
- The bond must remain in effect for at least two years.
- The bond must be filed with the CSLB.
California contractors may need other bonds depending on the scope of their work, including:
Bond requirements vary based on project size, public or private contracts, and other regulatory factors.
Remember that the information provided in this guide serves as a general overview. For more precise details and guidance on disciplinary bonds and other bonding requirements, consult with ZipBonds or the CSLB.
Apply for California Contractor Bonds Today
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888.435.4191 to speak with an agent directly!
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.