Iowa Contractor License Bond

A contractor working in Iowa may be required to have a license before beginning work with a customer. As part of the licensing requirements, an Iowa contractor license bond may be necessary, depending on the city or municipality overseeing licensing requirements. An Iowa contractor license bond is not insurance for the contractor but instead, works as a safeguard for the contractor’s customers in the event they experience losses due to fraudulent or illegal activities.

An Iowa contractor license bond is a type of surety bond that involves three parties. The principal, which is the licensed contractor, obtains the bond, while the obligee, the state or local authority in charge of licensing, requires a bond to be posted. A surety company provides the bond to the principal and pays claims on their behalf. Any successful claims that result in compensation are repaid by the contractor who holds the bond.

Contractors working in Iowa are likely required to complete the licensing process in order to work legally in the state. Those who are local to Iowa may need to secure an Iowa contractor license bond if they earn more than $2,000 per year in the field. Out-of-state contractors planning to do business with Iowa customers are also required to get an Iowa contractor license bond.

Under state law, contractors are defined as individuals who complete residential or commercial construction projects. These activities may include the following:

• Electrical work
• Mechanical work
• Heating and air conditioning service or installation
• Residential construction
• Commercial construction
• Plumbing work
• Roofing work

Local jurisdictions may have different definitions of a contractor. Licensing and bonding requirements may differ based on the city or county where a contractor plans to do business.

In Iowa, contractors are required to have a license to do business with customers in the state, and this requirements comes with the need to post an Iowa contractor license bond in most cases. Although licensing and bonding requirements are set forth under state law by the Iowa Department of Public Health and the Division of Labor, the obligee listed on surety bond is the customer of the contractor. The contact information for the Iowa licensing authority and enforcer of Iowa contractor license bonds is as follows:

Iowa Department of Public Health

Lucas State Office Building

321 E. 12th Street

Des Moines, Iowa 50319

Phone: 515-281-7689

In Iowa, licensed contractors are required to post a bond between $5,000 and $25,000. Fortunately, the price you pay for an Iowa contractor license bond is not the full amount. The surety company prices contractor bonds as a percentage of the bond requirement, ranging from 1 to 10% in most cases.

The percent you pay for your bond, known as the bond premium, is determined by your personal credit score. Contractors with a score below 599 may be deemed a higher risk to the surety company. To help offset this risk, the cost of an Iowa contractor bond is higher than it would be for someone with a high credit score.

You can start the process of obtaining an Iowa contractor license bond by submitting a short application form and quote request online. Once your business details and credit score are reviewed, the surety company will provide your bond quote and the steps you need to follow in order to post your bond.

There is no set expiration date for contractor licenses in Iowa, nor is there a specific date that needs to be listed on a contractor license bond. Instead, contractor licenses and accompanying Iowa contractor license bonds may require renewal each year or every two to three years. The surety company providing your Iowa contractor license bond sends renewal information in advance of the expiration date to ensure your bond remains active.