California Contractors Bond Rates On The Rise

If you’re like many California contractors, you may have been unpleasantly surprised by a significant increase in your contractor’s license bond renewal premium.  The reason for the rate increases vary, but at their core, the downturn in the construction industry has caused a substantial increase in bond payouts for surety companies.  The sudden influx of claims have placed overwhelming stress on some bond companies who reacted swiftly to protect what’s usually razor thin profit margins even under the best of times.  As a result, many bond companies have substantially changed underwriting requirements including among other initiatives, increasing the minimum credit thresholds for contractors.  While contractors with a credit score in the range of 680 and above can still qualify for rates around $100 for a one year bond, those with more marginal credit profiles will often have to pay more.  Fortunately, the impact of bond companies raising rates or credit requirements has largely been offset by other bond companies actively seeking to issue new bonds with competitive rates.

Request A California Contractors License Bond Quote

 

If you have not done so already, shop your bond renewal and carefully explore your options.  Contractors with poor credit can experience a substantial savings in some situations by utilizing a co-signor with good credit.  In addition, your bond premium with one bond company can often be several hundred dollars less per year than another simply because the credit thresholds between the bond companies may be separated by as few as two or three points on your FICO.  If you have questions regarding your contractor’s license bond, feel free to contact us and a Schaedler Insurance bond specialist would be happy to evaluate your situation.

 Jeremy Schaedler