Minnesota Plumbing Contractor Bond: A Comprehensive Guide
This guide provides information for insurance agents to help contractors on Minnesota Plumbing Contractor Bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $25,000
- Who Needs It: All individuals and business entities seeking to obtain a Plumbing Contractor License in the State of Minnesota
- Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with contractor licensing law
- Who Regulates Plumbing Contractors in Minnesota: The Minnesota Department of Labor and Industry (MDLI)
Background
Minnesota Administrative Rule 326B.46 subd2 requires plumbing contractors to obtain a license with the MDLI. The Minnesota 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 licensing law, plumbing contractors in Minnesota must purchase and maintain a $25,000 Plumbing Contractor Surety Bond to be eligible for licensure.
What is the Purpose of the Minnesota Plumbing Contractor Bond?
Minnesota requires contractors to purchase the Plumbing Contractor Bond as part of the application process to obtain a Plumbing Contractor License. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with 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 Minnesota Plumbing Contractor Surety Bond?
BondExchange makes obtaining a Minnesota Plumbing 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? Gain access 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.
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Is a Credit Check Required for the Minnesota Plumbing Contractor Surety Bond?
No, a credit check is not required for the Minnesota Plumbing Contractor Bond. Because this bond is considered relatively low-risk, the same low rate is offered to all plumbing contractors in Minnesota.
How Much Does the Minnesota Plumbing Contractor Surety Bond Cost?
The $25,000 Minnesota Plumbing Contractor surety bond costs just $100 per year or $10 per month.
How Does Minnesota Define “Plumbing Contractor”?
The DLI defines “plumbing contractor” as any independent business “who may contract to perform or offer to perform plumbing work in all areas of the state provided the contractor has at all times a licensed master plumber as a responsible individual and maintains compliance with the required bond, general liability insurance, and workers’ compensation insurance requirements.”
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Plumbing Contractors Apply for a License in Minnesota?
Contractors in Minnesota must navigate several steps to secure their Plumbing Contractor License. Below are the general guidelines, but contractors should refer to the application form for details on the process.
License Period – The Minnesota Plumbing Contractor License expires on December 31 of odd-numbered years (2021, 2023, etc.) and must be renewed before the expiration date
Step 1 – Start a Business
Contractors must create a business entity and register with the Minnesota Secretary of State prior to submitting their license application
Step 2 – Hire a Master Plumber
Contractors must employ at least one individual who has an active Master Plumber License. To obtain a Master Plumber License, individuals must complete the application, and pass the required licensure exam. All Master Plumber license applicants must:
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- Have at least one year of practical plumbing experience as a licensed
journey worker plumber; or - A current master plumber license from another state where the
requirements of the licensing jurisdiction are equivalent to those of
Minnesota, as determined by the commissioner; or - A current Minnesota restricted master plumber license and five years of
verifiable experience in business as a plumbing contractor in Minnesota.
- Have at least one year of practical plumbing experience as a licensed
Step 3 – Purchase Insurance
Plumbing Contractors must purchase liability insurance with the following minimum limits:
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- $50,000 per person
- $100,000 per occurrence
- $10,000 for property damage
Contractors with employees must also purchase workers’ compensation insurance
Step 4 – Purchase a Surety Bond
Contractors must purchase and maintain a $25,000 plumbing contractor bond
Step 5 – Complete the Application
All new contractor regulatory license applications should be completed online. Completed applications should include the following items:
How Does a Minnesota Plumbing Contractor Renew Their License?
Plumbing contractors can renew their licenses online here. The Minnesota Plumbing Contractor License expires on December 31 of odd-numbered years (2021, 2023, etc.) and must be renewed before the expiration date.
What Are the Insurance Requirements for the Minnesota Plumbing Contractor License?
The State of Minnesota requires plumbing contractors to obtain liability insurance with the following minimum limits:
- $50,000 per person
- $100,000 per occurrence
- $10,000 for property damage
Contractors with employees must also obtain workers’ compensation insurance. All plumbing contractors must purchase and maintain a $25,000 Plumbing Contractor Bond.
How Do Minnesota Plumbing Contractors File Their Bond?
Contractors should mail the completed bond form, including the power of attorney, to the following address:
Minnesota Department of Labor and Industry
Construction Codes and Licensing Division
Licensing and Certification Services
PO Box 64217
St. Paul, MN
The Plumbing Contractor surety bond requires signatures from both the surety company and the contractor. The surety company should include the following information on the bond form:
- Legal name, address, and phone number of the entity/individual(s) buying the bond
- Surety company’s name, address, and phone number
- Date the bond goes into effect
- Date the bond is signed and sealed
What Can Contractors Do to Avoid Claims Against the Minnesota Plumbing Contractor Bond?
To avoid claims on the Plumbing 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 in any acts of fraud
- Honor all contractual agreements
- Follow all building code regulations
What Other Insurance Products Can Agents Offer Plumbing Contractors in Minnesota?
Minnesota requires plumbing contractors to obtain liability insurance. Contractors with employees will also need to purchase workers’ compensation insurance. Bonds are our only business at BondExchange, so we do not issue any form of 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 Minnesota Plumbing Contractor Customers?
Minnesota conveniently provides a public database to search for active plumbing 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.