CSLB Increasing Bond Amounts to $25,000
The CSLB bond requirement increased to $25,000 on January 1, 2023 under Senate Bill 607, and that is still the amount in force today. If you were licensed before 2023 and have not looked at your bond since, it is worth a check, because a lapsed or underfunded bond suspends your license automatically.
What changed under SB 607
SB 607 raised three separate bond amounts to the same $25,000 figure:
The Contractors Bond went from $15,000 to $25,000
The Bond of Qualifying Individual went from $12,500 to $25,000
The Disciplinary Bond minimum went to $25,000
It was the first increase since 2007. The Legislature acted on a CSLB bond study which found that restitution orders were regularly exceeding the bond limit, leaving consumers short.
Most sureties handled the increase automatically. Bond companies raised the amounts with the CSLB and invoiced contractors for the additional premium, with the increase varying depending on the rate each contractor was already on.
Which bonds apply to you
Every active license needs a Contractors Bond on file. The CSLB cannot issue a license, reactivate an inactive one, or process a renewal without it, under Business and Professions Code section 7071.6.
A Bond of Qualifying Individual is a second, separate bond filed in the qualifier's name. You need one if your license is qualified by a Responsible Managing Employee, or by a Responsible Managing Officer who owns less than 10 percent of the voting stock. If your RMO owns 10 percent or more, the bond is not required.
If you hold your license through an LLC, there is a third requirement. LLC licensees have to file a $100,000 employee and worker bond in addition to the standard $25,000, covering unpaid wages, benefits and workers compensation contributions.
Two things that catch contractors out
The bond has to reach the CSLB headquarters within 90 days of its effective date. Miss that window and it will not be accepted.
The bond is not insurance for you. If a claim is paid out to a consumer or an employee, the surety will come to you to recover it. It protects the people you work for, not your business.
What it costs
Premiums are a percentage of the bond amount rather than the full $25,000, and the rate depends largely on your credit. Contractors with strong credit typically pay somewhere in the region of $200 to $300 a year, with weaker credit pushing that figure to double or triple the amount.
What to do now
Check the bond amount currently showing on your CSLB license record. If it still says $15,000, your license is at risk of suspension and you need to speak to your surety today.
Check your renewal date and make sure the bond runs past it. A bond that expires before the license renews will stall the renewal.
If your qualifier arrangement has changed, check whether a Bond of Qualifying Individual is now needed. Changing from an RMO with a majority holding to an RME brings that second bond into play.
Want a bond quote?
We can quote you on both the Contractors Bond and the Bond of Qualifying Individual, and tell you which ones your setup actually needs. We have been helping California contractors for more than 19 years.
Call us now on (800) 580-8129 or submit an inquiry on our website here.
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