Bonds & Surety› Contractor License Bonds › Arizona
Yes, and there is no single number. Arizona sets the bond from your license classification and your contemplated annual gross volume of work, from $2,500 up to $100,000.
Yes. Arizona requires a license if the total project cost including labor and materials is over $1,000, or if the work requires a municipal permit. The rule applies whether the business calls itself a handyman or a contractor.
The bond runs to the State of Arizona for the benefit of the people described in A.R.S. section 32-1152. The penal sum is fixed by your license classification and the annual volume of work you tell the Registrar you expect to do, under A.A.C. R4-9-112. Liability under the bond is limited to the penal sum for each classification of work you perform.
| Contemplated annual gross volume | Bond amount |
|---|---|
| Less than $150,000 | $5,000 |
| $150,000 to $500,000 | $15,000 |
| $500,000 to $1 million | $25,000 |
| $1 million to $5 million | $50,000 |
| $5 million to $10 million | $75,000 |
| Over $10 million | $100,000 |
| Contemplated annual gross volume | Bond amount |
|---|---|
| Less than $150,000 | $2,500 |
| $150,000 to $500,000 | $7,000 |
| $500,000 to $1 million | $17,500 |
| $1 million to $5 million | $25,000 |
| $5 million to $10 million | $37,500 |
| Over $10 million | $50,000 |
| Contemplated annual gross volume | Bond amount |
|---|---|
| Less than $750,000 | $9,000 |
| $750,000 or more | $15,000 |
| Contemplated annual gross volume | Bond amount |
|---|---|
| Less than $375,000 | $4,250 |
| $375,000 or more | $7,500 |
Three mechanics worth knowing. A dual license carries both bonds - the residential and commercial amounts are added together. You can increase the bond at any time, but a surety bond or cash deposit in lieu of a bond cannot be decreased except at renewal for the coming fiscal year, so a volume figure you overstate at application is a number you carry all year. And a cash deposit is allowed in place of a surety bond, under the same increase and decrease restrictions.
Residential contractors have a second obligation on top of the license bond: an assessment into the Registrar's Residential Recovery Fund, or a surety or cash bond of $200,000 in its place. Commercial-only classifications do not pay it.
Because Arizona sizes the bond off the volume you expect to do, the bond grows with the business rather than sitting still. That makes it a yearly underwriting conversation instead of a one-time filing - and the financial picture behind it is the same one a surety reads when you come back for performance and payment bonds.
Arizona accepts the NASCLA Accredited Examination in place of the AZ ROC trade exam for the KB-1 and KB-2 dual building classifications, and the NASCLA electrical program for the CR-11, C-11 and R-11 classifications.
You do not pay the face amount of the bond. You pay a premium, which is a percentage of it, and that percentage is set by underwriting - primarily your personal credit, how long you have been in business, and your financial position. A contractor with strong credit pays a small fraction of the bond amount. A contractor with credit problems pays more, and sometimes needs a market built for that situation, which we have.
We do not quote rates on a web page, and anyone who does is guessing at your file. For the mechanics of how bond pricing works, see how much contractor bonds cost. For a real number, call us.
This is the distinction that costs Arizona contractors work. A license bond is what the state or the city requires before it will let you operate. It is a fixed amount, it renews annually, and it protects the public. It says nothing about whether you can bond a job.
A performance bond is different. That is job-specific, written at the full contract value, and it is what an owner requires before awarding you the work. Contractors who assume their license bond makes them "bonded" find out otherwise the first time they try to bid public work.
The two are connected in one direction that matters: the financial file that gets you a license bond easily is the same file a surety underwriter reads when you ask for a performance bond. Building it properly now is what makes the bigger bond reachable later. See how contractors qualify for bonds and how a bond program gets built.
A license bond is also not insurance. It does not protect you - if a claim is paid, you reimburse the surety. See surety bonds versus insurance.
Our team writes contractor license bonds nationally and we never decline a submission - our job is to find the path to yes. Tell us the classification you are applying for and we will tell you what it takes. If you are building toward bigger work, we will look at the whole program, not just the bond in front of you.
Call the Grit team: (801) 505-5500
Yes, and there is no single number. Arizona sets the bond from your license classification and your contemplated annual gross volume of work, from $2,500 up to $100,000.
It depends on your classification and the annual volume of work you expect to do. General commercial contracting runs $5,000 to $100,000; specialty commercial contracting runs $2,500 to $50,000; general residential contracting runs $9,000 to $15,000; specialty residential contracting runs $4,250 to $7,500.
No. A license bond is a fixed annual requirement to hold your license and it protects the public. A performance bond is job-specific, written at the full contract value, and required by the project owner before award. Holding a license bond does not mean you can bond a job.
No. A surety bond protects the party the bond runs to. If a claim is paid on your bond, you reimburse the surety. Liability insurance protects your business; a bond does not.
A note on the details: Bond amounts, licensing thresholds, and filing rules change, and they vary by classification and by the agency issuing the license. Use this page as a starting point, not as legal advice. Confirm the current requirement with the licensing authority before you file, and confirm your own bond requirement with a licensed member of our team.
Already licensed and looking for work to bid? See where to find public construction work to bid on in Arizona, and the national guide to contractor license and permit bonds.