November 17th, 2020
Florida Financially Responsible Officer Bond: A Comprehensive Guide
This guide provides information for insurance agents to help contractors on Financially Responsible Officer bonds
At a Glance:
- Average Cost: $750 – $1,000 per year, based on the applicant’s personal credit standing
- Bond Amount: $100,000
- Who Needs It: All individuals that act as a Financially Responsible Officer (“FRO”) for a construction company in the State of Florida
- Purpose: To ensure the public will receive compensation for any damages should the construction company fail to comply with licensing law
- Who Regulates Contractors in Florida: The Florida Construction Industry Licensing Board (CILB)
***This page focuses exclusively on the Florida Financially Responsible Officer Bond. For more information on the Florida Construction Contractor Bond and license requirements, view our Florida Construction Contractor Bond page.***
Florida Statute 489.1195 requires a qualifying agent for construction companies operating in the state to be designated as a Financially Responsible Officer on the construction company’s contractor license. The Florida legislature enacted licensing laws and regulations to ensure that FROs engage in ethical business practices.
In order to provide financial security for the enforcement of the license law, FROs must post a cash deposit or purchase and maintain a $100,000 Financially Responsible Officer surety bond for each to be eligible for licensure.
What is the Purpose of theFinancially Responsible Officer Bond?
Florida requires FROs to purchase the Financially Responsible Officer Bond as part of the application process for the Construction Contractor License. The bond ensures that the public will receive compensation for financial harm if the construction company fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the construction company breaks licensing laws.
Who is Required to Purchase a Financially Responsible Officer Bond?
Florida requires construction companies to obtain a contractor license with the CILB. To obtain a construction contractors license, companies must employ at least one individual who has the experience necessary to perform the work as specified by the license type. This individual is referred to as the qualifying agent.
If the qualifying agent does not have an ownership interest in the construction company, then the company must appoint a Financially Responsible Officer who will assume liability for the company’s actions. A Financially Responsible Officer is only required when the qualifying agent is not an owner of the company, and the Financially Responsible Officer should be prepared to assume personal liability for actions committed by the construction company.
Does the Financially Responsible Officer Bond Cancel Out the Contractor License Bond?
No, all Florida contractors who have a credit score below 660 will still need to purchase and maintain a Florida Construction Contractor Bond. The Financially Responsible Officer Bond is a separate bond requirement needed for construction companies whose qualifying individual does not have an ownership stake in the company.
How Can an Insurance Agent Obtain a Financially Responsible Officer Surety Bond?
BondExchange makes obtaining a Florida Financially Responsible Officer 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 Florida Financially Responsible Officer Bond?
Yes, surety companies will run a credit check on the contractor to determine eligibility and pricing for the Florida Financially Responsible Officer 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 Florida Financially Responsible Officer Bond Cost?
The $100,000 Florida Financially Responsible Officer surety bond can cost anywhere between $750 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 $100,000 bond requirement.$100,000 Florida Financially Responsible Officer Bond Cost
|Credit Score*||Bond Cost (1 year)|
|675 – 699||$900|
|674 or lower||$1,000|
*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 Florida Define “Financially Responsible Officer”?
To paraphrase Florida Statute 489.1195, an FRO is an individual who is responsible for all financial aspects of a licensed construction company. The registered FRO may not serve as the qualifying agent.
How Do Construction Contractors Designate an FRO in Florida?
Contractors in Florida must navigate several steps to designate an FRO on their construction contractors license. Below are the general guidelines, but contractors should refer to the FRO Registration Form for details on the process.
Step 1 – Apply for a Construction Contractor License
Construction contractors in Florida must obtain a license prior to conducting business operations. Information on how to obtain a Florida Construction Contractor License can be found here.
Step 2 – Designate an FRO
Contractors will need to determine who they will want to represent the company as the FRO. The FRO should have an ownership stake in the company and be willing to be personally liable for the actions of the company.
Step 3 – Purchase a Surety Bond or Deposit Cash
The designated FRO must deposit cash or purchase and maintain a $100,000 Financially Responsible Officer surety bond.
Step 4 – Complete the Application
All designated FRO applications should be mailed to:
Department of Business and Professional Regulation
2601 Blair Stone Road
Tallahassee, FL 32399-0783
FROs must complete the application, including the following steps:
- 4.a Personal Credit Report – FROs will need to obtain a personal credit report and submit it with their application. FROs can find a list of approved vendors for obtaining their credit report here.
- 4.b Debts – FRO applicants must submit proof of satisfaction of liens, judgements, and discharge of bankruptcy (is applicable)
- 4.c Fingerprints – Applicants will need to submit a copy of their fingerprints to the CILB when submitting their application. FROs can find fingerprint service providers here.
Step 5 – Pay Fees
All FRO applicants will need to pay a $200 application fee when submitting their application.
Does a Florida Financially Responsible Officer Need to Renew Their Designation?
The FRO designation will be valid until either the construction contractor license expires or the construction company decides to change their FRO. All Florida certified construction contractor licenses expire on August 31 of every even numbered year (2020, 2022 etc) regardless of the date of issuance. All Florida registered construction contractor licenses expire on August 31 of every odd numbered year (2021, 2023 etc) regardless of the date of issuance.
What Are the Insurance Requirements for Florida Financially Responsible Officers?
Florida does not require FROs to obtain any form of liability insurance. However, the construction company will need to purchase worker’s compensation insurance for all employees. FROs must post a cash deposit or purchase and maintain a $100,000 Financially Responsible Officer surety bond.
How Do Florida Financially Responsible Officers File Their Bond With The Florida CILB?
FROs should mail the completed bond form, including the power of attorney, to the following address:
Department of Business and Professional Regulation
2601 Blair Stone Road
Tallahassee, FL 32399-0783
The Financially Responsible Officer surety bond requires signatures from both the surety company that issues the bond and the FRO. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
How Can Florida Financially Responsible Officers Avoid Bond Claims?
To avoid claims on the Financially Responsible Officer Bond, FROs must follow all financial regulations in the state, including some of the most important issues below that tend to cause claims:
- Pay taxes and contributions due to the state and municipalities on time and in full
- Pay all laborers and employees
- Pay suppliers for all materials and equipment
What Other Insurance Products Can Agents Offer Contractors in Florida?
Florida does not require construction contractors to obtain any form of liability insurance. However, most reputable contractors will seek to obtain this insurance anyway. Contractors with employees will have to purchase workers’ compensation 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 Florida Contractors?
Florida conveniently provides a public database to search for active construction contractors 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 Florida?
Contractors in Florida will need to obtain specific bonds correlating with their license type. Below are all the different contractor licensing bonds required by the State of Florida:
- Construction Contractor License Bond
- Painted Galvanized Steel Structures Performance