Arizona Contractor License Bond

An Arizona contractor license bond is a surety bond that every contractor licensed by the Arizona Registrar of Contractors (ROC) must keep on file. Required under A.R.S. §32-1152, the amount ranges from $2,500 to $100,000 per license classification, based on your estimated annual volume of work. It protects the people and businesses that can claim against it, including suppliers, workers, property owners and the Registrar. It is not insurance for the contractor: if the surety pays a valid claim, the contractor must repay it.

Key Takeaways

• Bond amount: $2,500 to $100,000 per license classification, set by your license type (residential, commercial or dual; general or specialty) and your estimated annual volume of work. Dual licenses combine the residential and commercial amounts.
• Cost: contractors with a credit score of 700 or higher typically pay 1% to 3% of the bond amount a year. That is about $100 to $270 on a $9,000 residential general contractor bond.
• Additional bonds: residential and dual licensees also need a $200,000 recovery bond, or must pay into the Residential Contractors' Recovery Fund instead.
• Continuous coverage: the bond has no end date. If it's canceled and no replacement is on file, your license is suspended by operation of law.

For a deeper look at what drives premiums, see our surety bond cost guide or estimate your premium with the surety bond cost calculator. For practical ways to bring your rate down, read how to lower your surety bond rate.

1. Confirm Which Bonds Your License Needs

Every license needs a contractor's bond sized to your classification and estimated annual volume of work. Residential and dual licenses also need a $200,000 recovery bond, unless you pay into the Residential Contractors' Recovery Fund instead. After certain disciplinary actions, the Registrar may require a higher bond. 

2. Apply Online

Our online application takes about five minutes. Have these details ready:

• Your exact business name as it appears, or will appear, on your ROC record, 
• Your ROC license number, if you already have one, and 
• The license classification(s) you hold.

3. Receive Your Quote

Most applicants get a quote within minutes. Files that need extra underwriting, such as challenged credit or a prior claim, can take 24 to 48 hours. We guarantee that you’re always getting the best quote possible.

4. Pay the Premium and File the Bond With the ROC 

Once you pay, the bond is issued in the licensee’s name and filed with the ROC. A surety connected to the ROC’s online portal can upload it straight to your application, so new applicants using one must buy the bond before submitting. The bond takes effect on the filing date, or on a later date shown on the bond, and the ROC won’t issue or renew a license without one in full force. See the full rules on the ROC’s bond information page. 

New to bonding? Our guide on how to get bonded walks through the process in more detail. Have questions along the way? Contact us or call (877) 514-5146.

A.R.S. §32-1152(B) sets a minimum and maximum bond for each license type and volume tier. The ROC then fixes the exact amount within that range under Ariz. Admin. Code R4-9-112. Your bond is based on the volume of work you estimate you'll do in Arizona in the coming fiscal year, for each license category you hold:

Dual licenses use one bond that lists the residential and commercial amounts separately, with the surety’s liability capped at each. If you hold several commercial licenses, your bond is the sum for each license. Dual and residential swimming pool general contractors are bonded at the general commercial amounts.

You can raise your bond at any time but only lower it at renewal. Your bond amount counts as your volume estimate, and knowingly underestimating it by a wide margin can lead to suspension or revocation.

Instead of a surety bond, you can post cash with the state or a certificate of deposit from an Arizona bank. It can be withdrawn two years after the license ends or is replaced by a surety bond, if no claims are pending. If claims reduce it, you have 30 days to top it up or file a surety bond, or your license is suspended.

Residential Recovery Bond

Residential and dual licensees must also do one of two things. They can furnish a separate $200,000 bond that pays only claims from homeowners and others covered by A.R.S. §32-1132, or they can pay an assessment into the Registrar's Residential Contractors' Recovery Fund. 

Disciplinary Bond

After a hearing, the Registrar can require a higher bond as a condition of issuing, renewing or reinstating a license. This applies to applicants or qualifying parties with a prior suspension or revocation, or who were tied to a licensee disciplined for violations they knew about or took part in. The Registrar sets the amount based on the seriousness of the violations. It can't be more than ten times the standard bond amount.

The disciplinary bond is filed on top of all other required bonds.

Separately, under A.R.S. §32-1154, the Registrar can temporarily suspend a license and impose increased bond or cash deposit requirements when a contractor commits one of the violations listed in that statute.

Other Bonds Arizona Contractors May Need

The license bond only satisfies the ROC. Public and many private projects require separate contract bonds, such as bid bonds, performance bonds and payment bonds. These guarantee a specific project rather than your license. For other bonds required in the state, see our Arizona surety bonds page. 

Anyone performing construction work in Arizona needs an ROC license, and therefore a bond, unless the job qualifies for the small-job exemption.

That exemption covers work with an aggregate contract price under $1,000, including labor, materials and all other items. The work must also be casual or minor in nature. The exemption doesn't apply if any of these is true:

• the work requires a local building permit,
• the work is part of a larger project, or the project is split into contracts under $1,000,
• the work involves fire safety installation or repair, or connects to a natural gas, propane or other fuel supply, or
• the person advertises to the public without disclosing that they aren't a licensed contractor.

If any of these applies, a license is required even for a job under $1,000. See the ROC's license classifications page and A.R.S. §32-1121 for details.

Splitting a larger project into smaller contracts to stay under the threshold is not allowed. Acting as a contractor without a license is a class 1 misdemeanor under A.R.S. §32-1164, with a fine of at least $1,000 for a first offense and at least $2,000 for each repeat offense. 

Arizona contractor bonds are continuous. They have no termination date and stay in force alongside your license, so you don't buy a new bond each time your license renews. You pay the premium to the surety periodically to keep the bond in place.

If your surety cancels the bond, it must give you and the ROC at least 30 days' written notice. Your license is suspended by operation of law on the cancellation date unless a replacement bond is on file. Arizona law requires a license in good standing to bid or perform work. When you switch bond providers, make sure the new bond's effective date matches the old bond's cancellation date so there's no gap.

You can check your license status at any time with the ROC's contractor search.

How much is an Arizona contractor license bond?

The bond amount ranges from $2,500 to $100,000, required by the ROC under A.R.S. §32-1152. The exact amount depends on your license classification and estimated annual volume of work. For example, a residential general contractor with under $750,000 in annual volume needs a $9,000 bond. You pay an annual premium, a percentage of that amount based mainly on your credit. Contractors with a credit score of 700 or higher typically pay 1% to 3% of the bond amount a year. 

Are contractors required to be bonded in Arizona?

Yes. Every ROC-licensed contractor must file a license bond or cash deposit before the license is issued, and the bond must be in full force to renew it. Some contractors need more: residential and dual licensees must also furnish a $200,000 recovery bond or pay into the Residential Contractors' Recovery Fund.

How long does a contractor's bond last in Arizona?

Arizona contractor bonds are continuous. They have no termination date and stay in force until canceled. You pay the premium to the surety to keep the bond active. If the surety cancels, it must give you and the ROC 30 days' notice, and your license is suspended on the cancellation date unless a replacement bond is on file.

How do I file a claim against a contractor's bond in Arizona?

Who can claim depends on the bond under A.R.S. §32-1152(E). Every license bond can be claimed by the Registrar for unpaid sums owed under the contractor statutes. The residential bond also covers anyone who furnished labor, materials or rented equipment on a residential job, and homeowners covered by A.R.S. §32-1132. The commercial bond also covers licensees and nonresidential property owners or lessees with a direct contract who were harmed by work that didn't meet building codes. To claim against a surety bond, bring an action at law against both the contractor and the surety. A suit must be filed within two years after the act, delivery of goods or rendering of services it is based on, with a different timing rule for fraud.

Do I need a contractor's license for small jobs in Arizona?

Not always. Work with an aggregate contract price under $1,000 is exempt if it's casual or minor in nature. It isn't exempt if it needs a local building permit, if it is part of a larger project or split into smaller contracts, if it involves fire safety systems or fuel-supply connections, or if the person advertises without disclosing that they aren't a licensed contractor. Anything outside the exemption requires a license.

Do subcontractors need a contractor license bond in Arizona? 

Yes. Arizona requires a license in good standing in the name of whoever bids or performs contracting work, and the bond is filed in the name of the licensee. That means a licensed subcontractor needs its own bond, sized to its own classification and volume. A subcontractor can't rely on the general contractor's license or bond. 

Can I get an Arizona contractor bond with bad credit? 

Yes. Lower credit means a higher premium, but our bad credit program helps contractors with challenged credit get bonded and registered.

More questions? Visit our surety bond FAQ or contact our team.