January 6th, 2021
South Carolina Residential Builder Bond : A Comprehensive Guide
This guide provides information for insurance agents to help builders on South Carolina Residential Specialty Builder bonds
At a Glance:
- Average Cost: $150 to $300 per year, based on the builder’s credit score
- Bond Amount: $15,000
- Who Needs It: All residential builders operating in South Carolina
- Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with registration law
- Who Regulates Residential Builders in South Carolina: The South Carolina Residential Builders Commission (RBC)
South Carolina Code of Laws 40-59-30 requires all residential builders operating in the state to obtain a license with the RBC. The South Carolina legislature enacted licensing laws and regulations to ensure that builders engage in ethical business practices. In order to provide financial security for the enforcement of the license law, builders must purchase and maintain a $15,000 residential builder surety bond to be eligible for licensure.
What is the Purpose of the South Carolina Residential Builder Bond?
South Carolina requires builders to purchase the Residential Builder Bond as part of the application process for the Residential Builder License. The bond ensures that the public will receive compensation for financial harm if the builder fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the builder breaks licensing laws.
How Can an Insurance Agent Obtain a South Carolina Residential Builder Surety Bond?
BondExchange makes obtaining a South Carolina Residential Builder 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 South Carolina Residential Builder Bond?
Surety companies will run a credit check on the owners of the residential building company to determine eligibility and pricing for the South Carolina Residential Builder bond. Builders with excellent credit and work experience can expect to receive the best rates. Builders 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 builder’s credit.
How Much Does the South Carolina Residential Builder Bond Cost?
The South Carolina Residential Builder surety bond can cost anywhere between $150 to $300 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $15,000 bond requirement.
|Credit Score||Bond Cost (1 year)|
|625 – 649||$225|
|Lower than 625||$300|
*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 South Carolina Define “Residential Builder”?
To paraphrase South Carolina Code of Laws 40-59-20, a residential builder is any individual or business entity constructs or supervises the construction or repair of a residential building that is not larger than three floors and does not contain more than 16 apartment units. The project cost must exceed $5,000 for a license to be required.
How Do Residential Builders Apply for a License in South Carolina?
Residential Builders in South Carolina must navigate several steps to secure their residential builders license. Below are the general guidelines, but builders should refer to the RBC’s licensing page for details on the process.
License Period – All South Carolina Residential Builder Licenses expire on June 30 of every even numbered year (2020, 2022 etc) and must be renewed before the expiration date
Step 1 – Meet the Experience Qualifications
All residential builders will need at least one year of relevant work experience to be eligible for licensure. Builders will need to submit supporting documentation with their application verifying their experience (W2s or 109s). Builders will need to list a licensed supervisor on their application who will be mailed an affidavit once the builder has submitted their license application. The supervisor must fill out and return the affidavit prior to the builder receiving their license.
Step 2 – Complete the Application
Builders can complete their application online here
Step 3 – Pay the Application Fee
All residential builders must submit a $100 application fee with their license application
Step 4 – Pass the Exam
After submitting the license application, builders will be mailed an exam waiver authorizing them to take the required licensing exam. Residential Builders can register for their licensure examination here.
Step 5 – Pay the Licensing Fee
After passing the exam, Residential Builders will need to pay a licensing fee in the following amount:
- $160 if the license is issued between July 1 of an even-numbered year to June 30 of an even-numbered year
- $80 if the license is issued between July 1 of an odd-numbered year to June 30 of an odd-numbered year
Step 6 – Purchase a Surety Bond
Residential builders will need to purchase and maintain a $15,000 residential builder surety bond
How Do South Carolina Residential Builders Renew Their License?
Residential builders can renew their license online here. All South Carolina Residential Builder Licenses expire on June 30 of every even numbered year (2020, 2022 etc) and must be renewed before the expiration date.
What Are the Insurance Requirements for South Carolina Residential Builders?
The State of South Carolina does not require residential builders to obtain any form of liability insurance. All residential builders will need to purchase and maintain a $15,000 residential builder surety bond.
How Do South Carolina Residential Builders File Their Bond With The RBC?
Builders should mail the completed bond form, including the power of attorney, to the following address:
South Carolina Department of Labor, Licensing and Regulation
Residential Builders Commission
PO Box 11329
Columbia, South Carolina 29211
The residential builder surety bond requires signatures from both the surety company that issues the bond and the builder. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Builder’s license term
- Date the bond is signed and goes into effect
What Can Residential Builders Do to Avoid Claims Against the South Carolina Residential Builder Bond?
To avoid claims on the Residential Builder Bond, builders must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not be negligent when performing contract work
- Do not abandon a job without a proper reason
- Do not engage in any acts of fraud
- Do not falsely advertise or misrepresent your abilities
What Other Insurance Products Can Agents Offer Residential Builders in South Carolina?
South Carolina does not require residential builders to obtain any form of liability insurance. However, most builders will seek to obtain this insurance anyway. 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 South Carolina Licensed Residential Builder Customers?
South Carolina conveniently provides a public database to search for active licensed residential builders in the state. The database can be accessed here. Contact BondExchange for help developing a marketing piece. Agents can also leverage our print-mail relationships for discounted mailing services.
What other Contractor License Bonds are Required in South Carolina?
Contractors in South Carolina will need to obtain specific bonds correlating with their license type. Below are all the different contractor licensing bonds required by South Carolina: