All contractors in the State of California are required to have a contractor’s bond. This bond is received from surety companies, and the annual rates differ from one Surety Company to the other. The amount payable depends on a number of factors linked directly to the contractor. For instance, a contractor with a strong financial standing may pay a lower annual fee for a contractor bond, than one teetering on the brink of bankruptcy. It’s all about risk management on the part of the surety company. On this basis, here is how to get the best rates on your California contractor bond.
1. Get your finances in order
This is an obvious one if you want to get good rates. A contractor that has healthy financial books, and has their credit ratings in order usually gets the best rates. In essence, before getting a contractor bond, think of how you can set things right with your creditors and improve your credit score. On top of that, you can set your tax records straight by paying your taxes or coming up with a clear roadmap on how to repay them. However, in the capital intensive and highly volatile construction business, maintaining financial stability is easier said than done. Sudden changes in market conditions can ruin your credit score in an instant. In such a situation, you can try the more flexible surety companies such as contractorbond.org. This company has a program that allows it to take 99% of contractors that have bad credit. By enrolling for such a program, you can work on your financial standing by taking on contracts and ultimately get to a position where you qualify for competitive rates.
2. Get contractor bond insurance
As stated earlier, for surety companies, it’s all about mitigating risks. In essence, a contractor needs to ensure that their perceived risks are as low as possible. One way to achieve this is by taking contractor bond insurance. This insurance ensures that the surety company is guaranteed of getting their money if risks materialize and the contractor is unable to pay. With this insurance, you present a lower level of risk, which incentivizes surety companies to give you much lower rates. To further lower your risks and incentivize surety companies to give you lower rates, take a liability insurance cover. This cover protects your company from risks such as employee liability, natural disasters among other workplace-related risks. This essentially guarantees that your company cannot go bankrupt due to a lawsuit related to workplace injuries. With such insurance, surety companies will have the confidence to give you much lower rates.
3. Build your work profile
A contractor that has a history of getting regular work is generally perceived as more stable than a startup. In essence, to get better rates on your contractor bond, work on getting more work. It may be hard at first, but over time, you will get much better rates on your contractor bond, as your profile improves. To build a good work profile, make sure you give your all in each contract that you get.
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