New Mexico Contractor License Bond: A Comprehensive Guide
This guide provides information for insurance agents to help contractors on New Mexico Contractor License bonds
At a Glance:
- Lowest Cost: $100 per year or $10 per month
- Bond Amount: $10,000
- Who Needs It: All individuals and businesses seeking to obtain a contractor license in the State of New Mexico
- Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with contractor licensing law
- Who Regulates Contractors in New Mexico: The New Mexico Regulation and Licensing Department, Construction Industries Division (CID)
Background
New Mexico Statute 60-13-12 requires contractors operating in the state to obtain a license with the CID. The New Mexico legislature enacted the 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, contractors must purchase and maintain a contractor license surety bond to be eligible for licensure.
What is the Purpose of the New Mexico Contractor License Bond?
New Mexico requires contractors to purchase the Contractor License Bond as part of the application process to obtain a 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 New Mexico Contractor License Surety Bond?
BondExchange makes obtaining a New Mexico Contractor License 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 New Mexico Contractor License Bond?
No, a credit check is not required for the New Mexico Contractor License Bond. Because this bond is considered relatively low-risk, the same low rate is offered to all contractors in New Mexico.
How Much Does the New Mexico Contractor License Bond Cost?
The $10,000 New Mexico Contractor License Bond costs either $100 per year or $10 per month.
How Does New Mexico Define “Contractor”?
To paraphrase the New Mexico Construction Industries Licensing Act, a contractor is any person who performs construction work as an independent business. Exemptions to this definition include:
- Material suppliers
- Individuals performing work on petroleum gas or water wells
- Public utility companies
- Telephone or Telegraph companies
- Pipeline companies
- Radio or television broadcasters
- Individuals performing construction work on residential property owned and used by them
- Individuals who complete only one construction project at a time where the total project cost does not exceed $7,200 a year
- Individuals and business entities who install equipment related to the distribution of liquified petroleum fuel
- Cable television or community antenna television companies
- Weatherization projects with a cost of $2,000 or less
- Individuals providing short-term depreciable improvements to commercial property with project costs of $5,000 or less
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 Contractors Apply for a License in New Mexico?
Contractors in New Mexico must navigate several steps to secure their contractor’s license. Below are the general guidelines, but contractors should refer to the licensing statutes for details on the process.
License Period – The New Mexico contractor license is valid for three years from the date of issuance and expires on the last day of the month in which it was issued
Step 1 – Determine the License Classification
New Mexico classifies all contractor licenses based on the type of work the contractor performs. There are close to 100 license classifications for the New Mexico Contractor license. A full list of license classifications can be found here. Contractors will need to complete a Classification Determination Request and mail this request to the following address:
PSI Services LLC
Po Box 45450
Rio Rancho, NM 87174
Step 2 – Hire a Qualifying Individual
Contractors who do not have the expertise to handle the day-to-day operations of their business must employ a qualifying individual who has knowledge and expertise in the contractor’s license classification(s). Qualifying individuals are responsible for passing the licensure exam (more on this later) and must have the appropriate level of experience for the contractor’s license classification(s). Below are the experience requirements for each license classification:
-
- Two years (4,000 hours):
- Residential building (GB-2) and building specialties (GS-1 through GS-34
- Asphalt Bitumen and Concrete Construction (GA-1 through GA-5)
- Fixed Works (GF-1 through GF-9) Residential Wiring (ER-1) and Electrical Specialties (ES-1 through ES-10)
- Mechanical Specialties (MS-3 and MS-6)
- Two years (4,000 hours):
-
- Four years (8,000 hours):
- General Building (GB-98)
- Asphalt Bitumen and Concrete Construction (GA98)
- Fixed Works (GF-98) Electrical- Residential and Commercial (EE-98)
- Electrical Distribution Systems (EL-1)
- Mechanical (MM-98)
- Plumbing (MM-1)
- Natural Gas Fitting (MM-2)
- HVAC (MM-3)
- Process Piping (MM-4)
- Fire Sprinklers (MS-12)
- Dry Chemical Fire Protection (MS-14)
- Four years (8,000 hours):
Contractors will need to complete an Application for Qualifying Party Certificate and a General Work Experience Affidavit and mail these forms to:
PSI Services LLC
Po Box 45450
Rio Rancho, NM 87174
Contractors will also need to pay a $30 certificate fee, plus an additional $6 fee for each license classification when mailing these forms.
Step 3 – Pass the Exam
Qualifying individuals will need to pass both a business law and general building licensure exam. Contractors can register for the exams here.
Step 4 – Purchase a Surety Bond
Applicants for the New Mexico Contractor License will need to purchase and maintain a $10,000 contractor license surety bond
Step 5 – Purchase Insurance
All contractors with employees must purchase and maintain workers’ compensation insurance
Step 6 – Complete the Application
Contractor license applications should be mailed to:
PSI Services LLC
Po Box 45450
Rio Rancho, NM 87174
Contractors must complete the application, including the following steps:
6.a Tax ID – Applicants are required to submit a current New Mexico Tax ID Certificate with their license application. Contractors can obtain a New Mexico Tax ID here
6.b Business Registration – Corporations, LLCs, LLPs, and LPs must register their business entity with the New Mexico Secretary of State
6.c Fees – Contractors will need to pay the following fees when submitting their license application:
-
- $300 license fee per classification, applies to:
- GB02
- GB98
- GA98
- GF98
- EE98
- MM98
- $150 fee per classification for all other classifications not listed above
- $300 license fee per classification, applies to:
How Does a New Mexico Contractor Renew Their License?
Contractors will be mailed a renewal application prior to their license expiration date. Contractors should mail their completed renewal application to the following address:
PSI
2301 Yale Blvd. S.E. Suite C-4
Albuquerque, NM 87106
The New Mexico contractor license is valid for three years from the date of issuance and expires on the last day of the month in which it was issued.
What Are the Insurance Requirements for Contractors in New Mexico?
The State of New Mexico requires all contractors with employees to purchase workers’ compensation insurance. Contractors will need to purchase and maintain a $10,000 contractor license surety bond.
How Do New Mexico Contractors File Their Bond?
Contractors should mail the completed bond form, including the power of attorney, to the following address:
PSI Services LLC
Po Box 45450
Rio Rancho, NM 87174
The contractor license 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 and city of the entity/individual(s) buying the bond
- Surety company’s name and state it is headquartered in
- Date the bond is signed
What Can Contractors Do to Avoid Claims Against the New Mexico Contractor License Bond?
To avoid claims on the Contractor License Bond, contractors must follow all New Mexico building code requirements.
What Other Insurance Products Can Agents Offer Contractors in New Mexico?
New Mexico requires contractors with employees to obtain workers’ compensation insurance. Most reputable contractors will also purchase liability insurance. 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 New Mexico Contractor Customers?
New Mexico conveniently provides a public database to search for active 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.
