Michigan Contractor License with Performance Guarantee – Renewable Bond

If you’re a contractor in Michigan, you know that staying compliant with licensing laws is essential to operating legally and securing work. One of the key requirements for many contractors is obtaining a Michigan Contractor License with Performance Guarantee – Renewable Bond. This bond ensures that contractors fulfill their contractual and legal obligations while protecting clients, suppliers, and the public from potential financial losses.

From my experience, I’ve seen contractors struggle with understanding bonding requirements and ensuring they maintain compliance year after year. That’s why I’ve put together this comprehensive guide—to help you navigate the process, understand the costs, and simplify bond renewal.

What is a Michigan Contractor License with Performance Guarantee – Renewable Bond?

A Michigan Contractor License Bond with a Performance Guarantee is a financial assurance required by the Michigan Department of Licensing and Regulatory Affairs (LARA) for certain contractors. This bond guarantees that the contractor will:

✔ Follow all Michigan state laws and local building codes
✔ Complete projects according to contract terms and industry standards
✔ Protect clients and stakeholders from financial losses due to misconduct or non-performance

Since this bond is renewable, contractors must maintain it as long as they remain in business. Failure to renew the bond could result in license suspension or revocation, which can cause delays, lost contracts, and legal penalties.

Why is This Bond Required?

The Michigan Contractor License with Performance Guarantee – Renewable Bond exists to protect the public and the construction industry from unethical or incompetent contractors. It serves three main purposes:

1. Legal Compliance

Michigan law requires certain contractors to post a bond as part of their licensing process. Without this bond, a contractor may not be able to obtain or renew their license.

2. Financial Protection for Clients and Suppliers

If a contractor fails to fulfill a contract, perform work correctly, or pay subcontractors and suppliers, the bond provides a form of financial compensation.

3. Industry Reputation & Trust

Having this bond in place demonstrates professionalism and reliability, helping contractors secure bigger projects, win more bids, and build trust with clients.

Who Needs This Bond?

The Michigan Contractor License with Performance Guarantee – Renewable Bond is required for many types of contractors, including:

🏗 General Contractors – Residential & commercial builders, renovators, and remodeling specialists
🔌 Electrical Contractors – Electricians handling wiring, power systems, and electrical infrastructure
🚰 Plumbing Contractors – Licensed professionals installing and repairing plumbing systems
❄ HVAC Contractors – Experts in heating, ventilation, and air conditioning systems
🔨 Specialty Contractors – Roofers, concrete workers, masons, and other trades

If you’re unsure whether your business requires this bond, it’s best to check with LARA or consult with a surety bond expert to confirm your specific licensing needs.

How Much Does a Michigan Contractor License Bond Cost?

The cost of a Michigan Contractor License with Performance Guarantee – Renewable Bond varies based on several factors:

1. Bond Amount Required by the State

• The required bond amount depends on the specific type of contractor license.

• Higher bond amounts generally lead to higher premiums.

2. Credit Score & Financial History

• Contractors with strong credit scores may qualify for lower bond premiums (often 1%–3% of the bond amount).

• Those with lower credit scores may face higher premiums but can still obtain bonding through specialized programs.

3. Business Experience & Claims History

• A contractor with several years of experience and a clean claims history is seen as less risky, which can lead to lower premiums.

• If a contractor has previous bond claims or financial issues, the premium may be higher.

4. Bond Term Length

• Some surety providers offer multi-year options, which can lower the annual cost compared to renewing each year.

From what I’ve seen, bond costs can range from $100 to several thousand dollars annually, depending on these factors.

How to Obtain a Michigan Contractor License Bond

Getting your Michigan Contractor License with Performance Guarantee – Renewable Bond is a straightforward process:

Step 1: Verify Your Bond Requirement

Check with LARA or your local licensing board to determine the exact bond amount and any specific requirements for your trade.

Step 2: Apply for the Bond

You’ll need to provide:
✔ Business name and structure (LLC, Corporation, Sole Proprietor, etc.)
✔ Contractor license details
✔ Financial information (credit score, business financials)

Step 3: Receive a Bond Quote

A surety provider will review your application and provide a quote based on your risk level and bond amount.

Step 4: Purchase the Bond

Once approved, you’ll pay the premium and receive your bond certificate.

Step 5: Submit the Bond to LARA

File your bond with the appropriate licensing authority to ensure compliance.

How to Renew Your Bond

Since this bond is renewable, contractors must maintain it to keep their license active. Here’s what you need to know about renewal:

✔ Renew Before the Expiration Date – Allow enough time to avoid license suspension.
✔ Review Your Credit & Business Performance – Improving financial health can lower renewal premiums.
✔ Check for Bond Rate Changes – Premiums may fluctuate based on claims history and market conditions.
✔ Stay Compliant – Avoid violations or bond claims to maintain low costs.

From my experience, contractors who renew their bonds early and keep a clean claims record often enjoy the most affordable rates over time.

Common Questions About Michigan Contractor License Bonds

1. Can I Get a Bond with Bad Credit?

Yes! While poor credit may lead to higher premiums, we work with specialized sureties that help contractors secure bonding even with credit challenges.

2. What Happens if My Bond Lapses?

A lapse in your bond could result in license suspension, legal fines, or an inability to take on new projects. Always renew your bond on time.

3. Can I Transfer My Bond If I Change My Business Name?

In most cases, a name change requires a new bond filing. Contact your surety provider to make adjustments.

4. Does This Bond Cover Project Defects?

No, this bond does not act as insurance. It guarantees compliance with laws and regulations but does not cover accidental damage or workmanship issues—that would require a contractor liability insurance policy.

Why Choose Axcess Surety for Your Michigan Contractor License Bond?

From my dealings with contractors, I’ve found that many struggle with bond renewals, premium costs, and understanding their obligations. That’s why we simplify the process by offering:

✔ Fast Approvals – Get bonded quickly and avoid delays in licensing.
✔ Competitive Rates – Affordable options for all credit types.
✔ Expert Guidance – We walk you through the bonding process step by step.
✔ Ongoing Support – We help you with renewals and compliance requirements.

Get Your Bond Today!

If you need a Michigan Contractor License with Performance Guarantee – Renewable Bond, don’t wait until the last minute. Apply today and keep your business compliant, licensed, and protected! 🚀