Ohio Private Water System Contractor Bond: A Comprehensive Guide

January 27, 2021

This guide provides information for insurance agents to help contractors on Ohio Private Water System Contractor bonds

At a Glance:

• Average Cost: Between $100 to $1,000 per year, based on the contractor’s credit score
• Bond Amount: 
  • $20,000 for contractors who have been registered for three years or less
  • $10,000 for contractors who have been registered for over three years
• Who Needs It: All individuals and businesses seeking to obtain a Private Water System Contractor Registration in the State of Ohio
• Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with registration law
• Who Regulates Water System Contractors in Ohio: The Ohio Department of Health (DOH)

Background

Ohio administrative code 3701-28 requires all private water system contractors operating in the state to register with the DOH. The Ohio legislature enacted the registration laws and regulations to ensure that contractors engage in ethical business practices. In order to provide financial security for the enforcement of the registration law, contractors must purchase and maintain either a $20,000 or $10,000 private water system contractor bond to be eligible for registration.

What is the Purpose of the Ohio Private Water System Contractor Bond?

Ohio requires contractors to purchase the Private Water System Contractor Bond as part of the application process to obtain a private water system contractor registration. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with the registration regulations. In short, the bond is a type of insurance that protects the public if the contractor breaks registration laws.

How Can an Insurance Agent Obtain an Ohio Private Water System Contractor Surety Bond?

BondExchange makes obtaining an Ohio Private Water System Contractor 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 ensures 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 Ohio Private Water System Contractor Bond?

Surety companies will run a credit check on the owners of the contractor company to determine eligibility and pricing for both the $20,000 and $10,000 Ohio Private Water System Contractor bond. Contractors with excellent credit and work experience can expect to receive the best rates. Contractors with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the contractor’s credit.

How Much Does the Ohio Private Water System Contractor Bond Cost?

The Ohio Private Water System Contractor surety bond can cost anywhere between $100 to $1,000 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. We also offer easy interest-free financing for premiums over $500. The chart below offers a quick reference for the approximate bond cost on the bond.

$10,000 Bond Limit

$20,000 Bond Limit

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Ohio Define “Private Water System Contractor”?

To paraphrase Ohio Administrative Code 3701-28-01, a private water system contractor is any individual who constructs, develops, installs, alters, repairs, services or maintains private water systems.

Exemptions to this definition include:

• Employees of a registered contractor
• An individual performing work on a private water system not requiring a permit

How Do Private Water System Contractors Apply for Registration in Ohio?

Private Water System Contractors in Ohio must navigate several steps to obtain their registration. Below are the general guidelines, but contractors should refer to the DOH’s Registration Packet for details on the process.

Registration Period – The Ohio Private Water System Contractor Registration expires on December 31 of every year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

New applicants for the Ohio private water system contractor registration will need to purchase and maintain a $20,000 Private Water System Contractor surety bond. After the contractor has been registered for three consecutive years, the bond requirement decreases to $10,000

Step 2 – Purchase Insurance

All private water system contractors will need to purchase and maintain liability insurance with a minimum limit of $500,000

Step 3 – Obtain a Business Filing

Contractors will need to obtain a business filing from the office of the Ohio Secretary of State and submit the filing with their application. Contractors operating their business as a sole proprietorship are exempt from this requirement.

Step 4 – Complete the Application

All private water system contractor registration applications should be mailed to:

Ohio Department of Health
BEHRP/Private Water Systems Program
P.O. Box 15278
Columbus, OH 43215-0278

Contractors must complete the application, including the following steps

4.a Additional Forms – Contractors will need to submit their business filing form and a certificate of liability insurance with their registration application. Contractors applying as an individual will need to submit a copy of their driver’s license or another state issued identification card.

4.b Fees – Contractors will need to pay a $250 application fee when submitting their registration application. Contractors seeking to immediately start work may elect to pay a $500 application fee to be allowed to start work while their application is processed

How Does an Ohio Private Water System Contractor Renew Their Registration?

The DOH releases a yearly registration packet contractors must complete to maintain their registration. The 2021 registration packet can be found here. Contractors should their registration application to the following address:

Ohio Department of Health
BEHRP/Private Water Systems Program
P.O. Box 15278
Columbus, OH 43215-0278

Contractors will need to complete 6 hours of continuing education every renewal period. The Ohio Private Water System Contractor Registration expires on December 31 of every year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Ohio Private Water System Contractor Registration?

The State of Ohio requires private water system contractors to obtain liability insurance with a minimum limit of $500,000. Contractors will need to purchase and maintain either a $10,000 or $25,000 surety bond.

How Do Ohio Private Water System Contractors File Their Bond With The Ohio DOH?

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

Ohio Department of Health
BEHRP/ Residential Sewage Program
246 N. High St.
Columbus, Ohio 43215-0278

The private water system contractor surety bond requires signatures from both the surety company that issues the bond and the owner(s) of the contractor company. The surety company should include the following information on the bond form:

• Date the bond goes into effect
• The bond amount
• Legal name and address of the entity/individual(s) buying the bond
• The bond applicant’s business operating structure (individual, corporation, partnership)
• The surety company’s name

What Can Contractors Do to Avoid Claims Against the Ohio Private Water System Contractor Bond?

To avoid claims on the Private Water System Contractor Bond, contractors must properly construct, develop, install, alter, repair, service or maintain private water systems. In accordance with the regulations set forth in Ohio Administrative Code 3701-28-18

What Other Insurance Products Can Agents Offer Private Water System Contractors in Ohio?

Ohio requires private water system contractors to obtain liability insurance with a minimum limit of $500,000. Bonds are our only business at BondExchange, so we do not issue liability 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 Ohio Private Water System Contractor Customers?

Ohio conveniently provides a public database to search for active private water system 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 Ohio?

Contractors in Ohio will need to obtain specific bonds correlating with their license type. Below are all the different contractor licensing bonds required by the State of Ohio:

• Sewage Treatment System Service Provider – Bond limits of $15,000 and $25,000
• Sewage Treatment Systems Installer – Bond limits of $25,000 and $40,000
• Sewage Treatment System Septage Hauler – Bond limit of $25,000