Dothan Contractor License Bond: A Comprehensive Guide

April 25, 2022

Dothan Contractor License Bond

This guide provides information for insurance agents to help their customers obtain a Dothan Contractor License Bond

At a Glance:

  • Average Cost: $100 per year
  • Bond Amount: Determined on a case by case basis (more on this later)
  • Who Needs it: All contractors and subcontractors operating in the city of Dothan, Alabama
  • Purpose: To ensure the public will receive compensation for any damages should the contractor violate licensing law
  • Who Requires the Bond: The City of Dothan

Background

Dothan Municipal Code 14-41 requires all contractors operating in the city to obtain a license before conducting business. The Dothan city council enacted the licensing laws and regulations to ensure that contractors engage in ethical business practices. To provide financial security for the enforcement of the licensing law, contractors must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Dothan Contractor License Surety Bond?

Dothan requires contractors to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with the regulations set forth in Dothan Municipal Code 14-41. Specifically, the bond protects the public in the event the contractor engages in any acts of fraud or fails to return land altered throughout the course of a project to a safe condition. In short, the bond is a type of insurance that protects the public if the contractor breaks licensing laws.

Dothan Contractor License Bond Form

Dothan Contractor License Bond Form

How Can an Insurance Agent Obtain a Dothan Contractor License Surety Bond?

BondExchange makes obtaining a Dothan Contractor License bond easy. Simply log in to your account and use our keyword search to find the “contractor” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (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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How is the Bond Amount Determined?

Dothan Municipal Code 18-22 dictates that the bond amount must match the contractor’s license classification, as outlined in the below table.

License Classification Bond Amount
General residential (projects over $10,000) $10,000
General commercial (projects over $50,000) $10,000
Heavy construction $10,000
Electrical $5,000
Plumbing, heating, and air conditioning $5,000
Masonry $2,000
Roofing  $2,000
Siding $2,000
Site preparation $2,000
Structural steel and precast $2,000
Tile and terrazo $2,000
Other foundation, structure, or building exterior $2,000
Other building equipment $2,000
Other building finishing $2,000
Glass and glazing $2,000
Framing $2,000
Flooring $2,000
Drywall and insulation $2,000
Poured concrete foundation and structure $2,000
Finish carpentry $2,000
All other specialty trades $2,000

Is a Credit Check Required for the Dothan Contractor License Bond?

No, a credit check is not required for the Dothan Contractor License bond. Because the bond is considered relatively low risk, the same low rate is offered to all contractors in Dothan, regardless of their credit history.

How Much Does the Dothan Contractor License Bond Cost?

The Dothan Contractor License bond costs just $100 per year.

Who is Required to Purchase the Bond?

Dothan requires all contractors and subcontractors to purchase a surety bond as a prerequisite to obtaining a business license. To paraphrase Dothan Municipal Code 14-41, a contractor is an independent business that provides construction, demolition, repair, furnishing, plumbing, or electrical services on a building or structure.

Additionally, homeowners exercising owner’s privilege and performing work on their own properties must purchase a $2,000 surety bond.

How do Contractors Apply for a License in Dothan?

Contractors in Dothan must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the the city website’s licensing page, as well as the licensing statutes.

License Period – All Dothan Business Licenses expire annually and must be renewed before the expiration date

Step 1 – Obtain a State License

Certain contractor classifications are required to obtain a statewide license before applying for a Dothan business license. Contractors should contact City Hall to determine whether or not their license classification requires a statewide license.

Step 2 – Purchase a Surety Bond

Contractors must purchase and maintain a surety bond (see above for limits) to obtain their local business license. Additionally, HVAC and residential roofing contractors must purchase an additional bond to be before obtaining their state licenses.

Step 3 – Complete the Application

Contractors are eligible to apply for a business license after purchasing a surety bond and obtaining a state license (if applicable). All Dothan Business License applications should be completed online or mailed to the following address:

City of Dothan
P.O. BOX 2128
Dothan, AL 36302

How Do Contractors Renew Their Dothan Business Licenses?

Contractors can renew their business license online or in person at the Customer Service Center, which is located on the first floor of the Dothan Civic Center.

What are the Insurance Requirements for Contractors in Dothan

Dothan does not require contractors to purchase any form of liability insurance as a prerequisite to obtaining a business license. Contractors must purchase and maintain a surety bond (see above for limits) to obtain their local business license. Additionally, HVAC and residential roofing contractors must purchase an additional bond to be before obtaining their state licenses.

How Do Dothan Contractors File Their Bonds?

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

City of Dothan
P.O. BOX 2128
Dothan, AL 36302

The bond requires signatures from both the surety company that issues the bond and a representative from the contractor. The surety company should include the following information on the bond form:

  • Legal name and address of entity/individual(s) buying the bond
  • Surety company’s name
  • Date the bond is signed

What Can Dothan Contractors Do to Avoid Claims Against Their Bonds?

To avoid claims on their bonds, contractors in Dothan must follow all license regulations in the city, including some of the most important issues below that tend to cause claim

  • Do not engage in any acts of fraud
  • Return land altered throughout the course of a project to a safe condition
  • Ensure the safe conditions of all altered land for a period of 1 year after the completion of a project
  • Replace all excavated soil

What Other Insurance Products Can Agents Offer Contractors/Subcontractors in Dothan?

Dothan does not require contractors to purchase liability insurance as a prerequisite to obtaining a business license. However, most reputable contractors will seek to obtain this insurance anyway. 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 Dothan Contractor/Subcontractor Customers?

Dothan unfortunately does not provide a public database to search for active contractors in the city. We suggest contacting the city directly to obtain this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-07-08T09:59:15-04:00