Different Bond Amounts

[Bond Magician]

Why do some states require small bond amounts for contractors to obtain their license? Why do some states require larger bond amounts (ex - $200,000)?

[Mother Bond]

Originally Posted by Bond Magician

Why do some states require small bond amounts for contractors to obtain their license? Why do some states require larger bond amounts (ex - $200,000)?

Bond amounts can vary greatly from state to state. Specific license types and the volume of business sometimes determine the bond amount for certain states as well.

One of the reasons it can vary is that bonds can be required for several different purposes. Most contractor license bonds are required to ensure contractors abide by the statutes regulating their license. Others are required to guarantee the payment of taxes related to their business. Some States require a bond because the licensee is an out-of-state contractors.

All in all, state legislations requiring surety bonds develop and change over time to protect the public from frequent problems that arise with particular types of businesses.