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AZ Contractors Bonding Requirements


Posted on 07/22/2014

 ARIZONA CONTRACTORS' BONDING REQUIREMENTS AND INFO

It is a contractor's responsibility to file a Bond in the amount required for their license classification and anticipated annual gross volume. The bond may be in a form of a surety bond or a cash bond.

Residential contractors are also required to provide a consumer protection bond. This may be in the form of a Surety Bond, cash deposit in the amount of $200,000 or payment into Residential Contracctors' Recovery Fund. The application instructions provide detailed information on this requirement. 

Surety Bonds can be obtained from your insurance agent or from another insurance company which is authorized by Arizona  Department of Insurance to opearate in Arizona and issue Contractors License Bonds

Bonds can also be provided in the form of cash or certificate of deposit from a bank which operates in Arizona. Contact any Arizona Registrar of Contractors (ROC) office to obtain an alternative to cash assignment form if you wish to use a certificate of deposit for your contractors license bond.

The surety  must be continuous. This means that there is no termination date on the bond. You may be required to pay premiums to the insurance company periodically to keep the bond in force. The bonding company has the right to cancel the bond but must send a notice to you and the Arizona Registrar of Contractors thirty days prior to the cancellation date. You will have to replace the bond or your license will be suspended. 

If your bond is in cash, the agency will retain the bond until two years after the license terminates. If no claims are made against the bond in that time, you may apply to have the bond released to you.

The amount of the contractor's license bond may be increased at any time during the fiscal year. However, a surety bond or cash deposit in lieu of bond cannot be decreased except at the time of renewal for the ensuing fiscal year.

Surety bonds or cash deposits shall not become effective until filed with the Registrar's office. If the effective date as shown upon the bond is after the date of filing with the Registrar, then the effective date shown upon the bond shall be the controlling date on which the bond becomes effective.

Contractor's license bonds are established in the following amounts as based upon the gross volume of work contemplated by the licensee within the State of Arizona for the ensuing fiscal year: 

License Type Contemplated Gross Volume (Per License) Bond Amount Residential General Contractors Less than $750,000 $9,000 $750,000 or more $15,000 Residential Specialty Contractors Less than $375,000 $4,250 $375,000 or more $7,500 Commercial General Contractors (Includes General Engineering Contractors) $150,000 or less $5,000 In excess of $150,000 but not more than $500,000 $15,000 In excess of $500,000 but not more than one million $25,000 In excess of one million but not more than five million $50,000 In excess of five million but not more than ten million $75,000 Over ten million $100,000 Commercial Specialty Contractors $150,000 or less $2,500 In excess of $150,000 but not more than $500,000 $7,000 In excess of $500,000 but not more than one million $17,500 In excess of one million but not more than five million $25,000 In excess of five million but not more than ten million $37,500 Over ten million $50,000


Dual license bond amounts are calculated by combining the amount required for residential and commercial. 

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