November 13th, 2020
District of Columbia Home Improvement Contractor Bond: A Comprehensive Guide
This guide provides information for insurance agents to help contractors on District of Columbia (Washington D.C) Master Refrigeration and Air Conditioning bonds
At a Glance:
- Average Cost: $500 – $5,000 for a two year term, based on the contractor’s credit standing
- Bond Amount: $25,000
- Who Needs It: All individuals and businesses that act as home improvement contractors in the District of Columbia
- Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with contractor licensing law
- Who Regulates Home Improvement Contractors in the District of Columbia: The District of Columbia Department of Consumer and Regulatory Affairs (DCRA)
Code of the District of Columbia 26-1152.08 requires all home improvement contractors operating in the District to obtain a license with the DCRA. The District of Columbia legislature enacted licensing laws and regulations to ensure that home improvement contractors engage in ethical business practices.
In order to provide financial security for the enforcement of the license law, home improvement contractors must purchase and maintain a $25,000 home improvement contractor surety bond to be eligible for licensure.
What is the Purpose of the District of Columbia Home Improvement Contractor Bond?
The District of Columbia requires contractors to purchase the Home Improvement Contractor Bond as part of the application process for the Home Improvement Contractor 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 a DC Home Improvement Contractor Surety Bond?
BondExchange makes obtaining a District of Columbia Home Improvement 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 Home Improvement Contractor Bond?
Yes, surety companies will run a credit check on the contractor to determine eligibility and pricing for the D.C. Home Improvement 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 DC Home Improvement Contractor Bond Cost?
The $25,000 District of Columbia Home Improvement Contractor surety bond can cost anywhere between $500 to $5,000 for the required two-year period.
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 $25,000 bond requirement.
|Credit Score*||Bond Cost (2 years)|
|675 – 699||$750|
|650 – 674||$1,000|
|625 – 649||$1,250|
|600 – 624||$1,500|
|575 – 599||$2,250|
|550 – 574||$3,000|
|525 – 549||$3,750|
|500 – 524||$5,000|
*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 the District of Columbia Define “Home Improvement Contractor”?
To paraphrase NAICS Code: 236118, a home improvement contractor is any person or business entity who, for a fee, repairs, remodels or makes alterations to a residential property as an independent business.
How Does Home Improvement Contractors Apply for a License in Washington D.C.?
Home Improvement Contractors in D.C. must navigate several steps to secure their license. Below are the general guidelines, but contractors should refer to the DCRA’s home improvement contractor page for details on the process.
License Period – The D.C. Home Improvement Contractor License is valid for two years and must be renewed before the expiration date
Step 1 – Obtain a Basic Business License
All businesses operating in the District of Columbia must obtain a Basic Business License. Contractors can apply for a basic business license here.
Step 2 – Purchase Insurance
All home improvement contractors must purchase liability insurance and submit a certificate of insurance with their application. The minimum required insurance limits for home improvement contractors are:
- $50,000 per person
- $100,000 per accident
- $10,000 property damage per accident
Step 3 – Obtain an Occupancy Certificate
Contractors will need to obtain either (1) a Certificate of Occupancy if their business location is a commercial building, or (2) a Home Occupation Permit if their business location is residential building.
Step 4 – Purchase a Surety Bond
Home Improvement contractors must purchase and maintain a $25,000 Home Improvement Contractor surety bond. The surety bond must be issued for a two year term.
Step 5 – Complete the Application
All home improvement contractor regulatory license applications should be completed online through the DC Business Center’s licensing portal.
Contractors must complete the application, including the following steps:
- 5.a Business Registration – Contractors operating as a corporation, partnership, LLC or trust must register their business with the D.C. Corporations Division
- 5.b Home Improvement Contract – Contractors will need to submit three different sample home improvement contracts with their application
- 5.c Salesperson Designation – Contractors will need to submit a home improvement salesperson designation letter for each employee authorized to perform sales on the contractor’s behalf
- 5.d Background Check – All home improvement contractors will need to submit a criminal history check with their application. Contractors can obtain this report by contacting the Metropolitan Police Department at (202) 727-4245 (applicants who live outside of D.C. should contact their local police department instead).
- 5.e Tax Registration – Home improvement contractors will need to register either their social security number or employer identification number (EIN) with the DC Office of Tax and Revenue. Contractors can obtain an EIN here.
How Do DC Home Improvement Contractors Renew Their License?
Home improvement contractors can renew their license online through the D.C. Business Center’s renewal page. The D.C. Home Improvement Contractor License is valid for two years and must be renewed before the expiration date.
What Are the Insurance Requirements for the D.C. Home Improvement Contractors License?
The District of Columbia requires home improvement contractors to obtain liability insurance with minimum limits of 50/100/10. In addition, contractors must file a $25,000 home improvement contractor surety bond.
How Do DC Home Improvement Contractors File Their Bond With The DCRA?
Home improvement contractors should scan the completed bond form and submit it online through the DC Business Center’s licensing portal. The home improvement contractor 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 and address of entity/individual(s) buying the bond
- Surety company’s name
- Date the bond is signed
- Date the bond goes into effect
- Two witness signatures for the licensee
How Can DC Home Improvement Contractors Avoid Bond Claims?
To avoid claims on the Home Improvement 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
- Repair all property damage caused through the course of work
What Other Insurance Products Can Agents Offer Home Improvement Contractors in Washington DC?
DC requires home improvement contractors to obtain liability insurance. 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 DC Home Improvement Contractors?
The District of Columbia conveniently provides a public database to search for active home improvement in the state. The database can be accessed here. Contact BondExchange for help developing a marketing piece.
What other Contractor License Bonds are Required in Washington DC?
Contractors in DC will need to obtain specific bonds correlating with their license type. Below are all the different contractor licensing bonds required by the District of Columbia: