Tennessee Home Improvement Contractor Bond: A Comprehensive Guide

This guide provides information for insurance agents to help contractors on Tennessee Home Improvement Contractor 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 home improvement contractor license in the State of Tennessee
• 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 Tennessee: The Tennessee Department of Commerce and Insurance (DCI)

Background

Tennessee Statute 62-6-508 requires home improvement contractors operating in the state to obtain a license with the DCI. The Tennessee 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 license law, contractors must either obtain a letter of credit, a cash or property bond, or purchase and maintain a $10,000 home improvement contractor surety bond to be eligible for licensure.

What is the Purpose of the Tennessee Home Improvement Contractor Bond?

Tennessee 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 Tennessee Home Improvement Contractor Surety Bond?

BondExchange makes obtaining a Tennessee 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? 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 Tennessee Home Improvement Contractor Bond?

No, a credit check is not required for the Tennessee Home Improvement Contractor bond. Because this bond is considered relatively low-risk, the same low rate is offered to all contractors in Tennessee.

How Much Does the Tennessee Home Improvement Contractor Bond Cost?

The $10,000 Tennessee Home Improvement Contractor Bond costs $100 per year or $10 per month.

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 Does Tennessee Define “Home Improvement Contractor”?

The Tennessee DCI considers any individual or business entity that performs remodeling services to existing residential homes to be a home improvement contractor. To be considered a home improvement contractor, the project cost must be between $3,000 to $25,000. Projects exceeding $25,000 in cost will require a contractor’s license.

Do all Home Improvement Contractors Need a License?

Not all counties in Tennessee require home improvement contractors to obtain a license. Currently, the only counties in Tennessee that require home improvement contractors to be licensed are:

• Bradley
• Davidson
• Haywood
• Hamilton
• Knox
• Marion
• Robertson
• Rutherford
• Shelby

How Do Home Improvement Contractors Apply for a License in Tennessee?

Home improvement contractors in Tennessee must navigate several steps to secure their home improvement contractor license. Below are the general guidelines, but contractors should refer to the Application Packet for details on the process.

License Period – The Tennessee Home Improvement Contractor License is valid for two years from the date of issuance and must be renewed before the expiration date

Step 1 – Register with the Secretary of State

Contractors must register their business entity with the Tennessee Secretary of State and be in good standing prior to submitting their license application

Step 2 – Purchase a Surety Bond

Contractors must either obtain a letter of credit, a cash or property bond, or purchase and maintain a $10,000 home improvement contractor surety bond

Step 3 – Purchase Insurance

Contractors must purchase liability insurance with a minimum limit of $100,000. Contractors with employees will also need to purchase worker’s compensation insurance.

Step 4 – Complete the Application

All home improvement contractor regulatory license and renewal applications should be mailed to:

Department of Commerce and Insurance
Board for Licensing Contractors
500 James Robertson Pkwy.
Nashville, TN 37243-1150

Contractors must complete the application, including the following steps:

4.a Contract – Contractors must submit a copy of a sample contract that will be used when contracting with customers

4.b Experience – Contractors will need to provide information on all past business experience including any disciplinary actions and code violations that were committed

Step 5 – Pay Fees

All home improvement contractors will need to pay a $250 application fee when submitting their license application

What Are the Insurance Requirements for Home Improvement Contractors in Tennessee?

The state of Tennessee requires home improvement contractors to purchase liability insurance with a minimum limit of $100,000. Home improvement contractors with employees must also purchase worker’s compensation insurance. Contractors must either obtain a letter of credit, a cash or property bond, or purchase and maintain a $10,000 home improvement contractor surety bond.

How Do Tennessee Home Improvement Contractors Renew Their License?

Tennessee home improvement contractors should mail their renewal application to the following address:

Department of Commerce and Insurance
Board for Licensing Contractors
500 James Robertson Pkwy.
Nashville, TN 37243-1150

The Tennessee Home Improvement Contractor License is valid for two years from the date of issuance and must be renewed before the expiration date.

How Do Tennessee Home Improvement Contractors File Their Bond With The Tennessee DCI?

Contractors should mail the completed bond form, including the power of attorney, to the following address:

Department of Commerce and Insurance
Board for Licensing Contractors
500 James Robertson Pkwy.
Nashville, TN 37243-1150

The home improvement contractor 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 address of the entity/individual purchasing the bond
• Name and address of the surety company
• Date the bond goes into effect

What Can Contractors Do to Avoid Claims Against the Tennessee Home Improvement Contractor Bond?

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 in, or allow any representatives of your business to engage in, any acts of fraud
• Refund all money paid for work not performed
• Include your assigned license number in all advertisements

What Other Insurance Products Can Agents Offer Home Improvement Contractors in Tennessee?

Tennessee requires all home improvement contractors to obtain liability insurance. Additionally, contractors with employees must purchase worker’s compensation 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 Tennessee Home Improvement Contractor Customers?

Tennessee 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.