Arkansas Commercial Contractor Bond: A Comprehensive Guide

November 9th, 2020

This guide provides information for insurance agents to help contractors on Arkansas Commercial Contractor bonds

At a Glance:

• Average Cost: $100 per year
• Bond Amount: $10,000
• Who Needs It: All individuals and businesses that act as commercial contractors on projects costing $50,000 or more in the State of Arkansas
• Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with contractor licensing law
• Who Regulates Commercial Contractors in Arkansas: The Arkansas Contractor’s Licensing Board (CLB)

Background

Arkansas State Licensing Law 17-25-101 requires commercial contractors operating in the state to obtain a Commercial Contractors License with the CLB. The Arkansas legislature enacted licensing laws and regulations to ensure that contractors engage in ethical business practices.

In order to provide financial security for the enforcement of the license law, contractors must purchase and maintain a $10,000 Commercial Contractors surety bond to be eligible for licensure.

What is the Purpose of the Arkansas Commercial Contractor Bond?

Arkansas requires contractors to purchase the Commercial Contractors Bond as part of the application process for the Commercial Contractors License. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the contractor breaks licensing laws.

How Can an Insurance Agent Obtain an Arkansas Commercial Contractor Surety Bond?

BondExchange makes obtaining an Arkansas Commercial Contractors Bond easy. Simply login to your account and use our keyword search to find the “contractor” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensure that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

Is a Credit Check Required for the Arkansas Commercial Contractor Bond?

No, a credit check is not required for the Arkansas Commercial Contractor bond. Because this bond is considered relatively low-risk, the same low rate is offered to all contractors in Arkansas.

How Much Does the Arkansas Commercial Contractor Bond Cost?

The $10,000 Arkansas Commercial Contractor Bond costs $100 per year.

How Does Arkansas Define “Commercial Contractor”?

To paraphrase Arkansas State Licensing Law 17-25-101, a commercial contractor is any person or business entity who performs, is capable to perform, or submits a bid to perform a construction project, as an independent business, on a commercial property. The job must be at least $50,000 for the individual/business to be considered a commercial contractor.

How Do Contractors Apply for a Commercial Contractor License in Arkansas?

Contractors in Arkansas must navigate several steps to secure their commercial contractor’s license. Below are the general guidelines, but contractors should refer to the Application Packet for details on the process.

License Period – The Arkansas Commercial Contractors License is valid for one year and expires on the date that the contractor submitted their financial statement (or surety bond) to the license board.

Step 1 – Determine the License Type

Arkansas requires contractors to obtain specific licenses corresponding to the nature in which the contractor’s business operates. Below are the different types of the Arkansas Contractors License.

• • Sub Contractor Registration Certificate – Contractors who have a contract with a licensed contractor as opposed to the project owner
  • Commercial – Performs commercial contract work on a project that is $50,000 or more. There are two different types of the Commercial Contractors License:
    • Restricted – Can only do work on jobs less than $750,000
    • Unrestricted – Can do commercial projects of any size
  • Temporary Commercial – This license is only required for contractors with a current out of state contractor license
  • Residential Builder – Builds a single-family residence. Builders will only need a license when the project cost is over $2,000
  • Temporary Residential Builder – This license is only required for contractors with a current out of state contractor license
  • Residential Remodeler – Makes structural changes or adds additions to a single-family residence. Remodelers will only need a license when the project cost is over $2,000
  • Temporary Residential Remodeler – This license is only required for contractors with a current out of state contractor license
  • Home Improvement – Does specialty work on a single-family home. Contractors are only required to obtain a license when the project cost is over $2,000
  • Temporary Home Improvement – This license is only required for contractors with a current out of state contractor license

***The remainder of the licensing steps will focus solely on obtaining the Restricted Commercial Contractors License. Readers can click the name of the license type for specific requirements on how to obtain each license.***

Step 2 – Purchase a Surety Bond

Commercial contractors must purchase and maintain a $10,000 commercial contractor surety bond.

Step 3 – Complete the Application

All commercial contractors regulatory license applications should be mailed to:

Contractors Licensing Board
4100 Richards Road
North Little Rock, Arkansas 72117

Commercial Contractors must complete the license application, including the following steps:

• • 3.a References – Contractors must acquire three references who can attest to their professional experience in the contractor’s chosen classification/specialty. The references must fill out a reference form located on pages 8-10 of the application, and the contractor must submit these forms with their application.
  • 3.b Business and Law Exam – Contractors must pass the Arkansas Business and Law exam and submit a copy of their test score sheet with their application. Contractors should view the Exam Instructions Sheet for information on how to register for the exam.
  • 3.c Business Documents – Corporations, LLCs, and LLPs must submit a copy of their formation documents as recognized by the Arkansas Secretary of State. Contractors can register their business with the Arkansas Secretary of State here.
  • 3.d Worker’s Compensation – Contractors who have employees must obtain worker’s compensation insurance and submit proof of insurance with their application

Step 4 – Pay Fees

Commercial Contractors will need to pay a $100 filing fee when submitting their application.

How Do Arkansas Commercial Contractors Renew Their License?

Contractors in Arkansas can renew their licenses online through the renewal portal. The license must be renewed each year and the commercial contractor bond must also be renewed and maintained for all active licenses.

What Are the Insurance Requirements for the Arkansas Commercial Contractors License?

The State of Arkansas does not require commercial contractors to obtain any form of liability insurance. However, contractors who have employees will need to obtain worker’s compensation insurance and all commercial contractors must post a surety bond.

How Do Arkansas Commercial Contractors File Their Bond With The Arkansas CLB?

Contractors should mail the completed bond form, including the power of attorney, to the following address:

Contractors Licensing Board
4100 Richards Road
North Little Rock, Arkansas 72117

The commercial contractor surety bond requires signatures from both the surety company that issues the bond and the contractor. The surety company should include the following information on the bond form:

• Legal name, address, social security number, and phone number of entity/individual(s) buying the bond
• Surety company’s name, address, and phone number
• Date the bond goes into effect

How Can Arkansas Contractors Avoid Bond Claims?

To avoid claims on the Commercial Contractor Bond, contractors must follow all license regulations in the state, including some of the most important issues below that, tend to cause claims:

• Do not engage, or allow representatives of the business to engage, in any acts of fraud
• Do not engage in any illegal selling practices
• Pay all laborers and suppliers

What Other Insurance Products Can Agents Offer Contractors in Arkansas?

Arkansas does not require commercial contractors to obtain general liability insurance. However, most contractors will consider obtaining liability insurance anyway. Bonds are our only business at BondExchange, so we do not issue any form of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Arkansas Commercial Contractor Customers?

Arkansas conveniently provides a public database to search for active commercial contractors in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

What other Contractor License Bonds are required in Arkansas?

Contractors in Arkansas will need to obtain specific bonds correlating with their license type. Contractors seeking to obtain an Underground Storage Tank License will need to purchase and maintain a $25,000 Underground Storage Tanks Contractor Bond.