Minnesota Electrical Contractor Bond: A Comprehensive Guide
This guide provides information for insurance agents to help contractors on Minnesota Electrical Contractor Bonds
At a Glance:
- Lowest Cost: $250 per year or $25 per month
- Bond Amount: $25,000
- Who Needs It: All individuals and business entities seeking to obtain an Electrical Contractor License in the State of Minnesota
- Purpose: To ensure the public will receive compensation for any damages should the contractor fail to comply with contractor licensing law
- Who Regulates Electrical Contractors in Minnesota: The Minnesota Department of Labor and Industry (MDLI)
Background
Minnesota Administrative Rule 326B.33 requires electrical contractors to obtain a license with the MDLI. The Minnesota legislature enacted licensing laws and regulations to ensure that contractors engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, electrical contractors in Minnesota must purchase and maintain a $25,000 Electrical Contractor Surety Bond to be eligible for licensure.
What is the Purpose of the Minnesota Electrical Contractor Bond?
Minnesota requires contractors to purchase the Electrical Contractor Bond as part of the application process to obtain an Electrical Contractor License. The bond ensures that the public will receive compensation for financial harm if the contractor fails to comply with licensing regulations. In short, the bond is a type of insurance that protects the public if the contractor breaks licensing laws.
How Can an Insurance Agent Obtain a Minnesota Electrical Contractor Surety Bond?
BondExchange makes obtaining a Minnesota Electrical Contractor Bond easy. Simply login to your account and use our keyword search to find the “contractor” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (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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Is a Credit Check Required for the Minnesota Electrical Contractor Surety Bond?
No, a credit check is not required for the Minnesota Electrical Contractor Bond. Because this bond is considered relatively low-risk, the same low rate is offered to all electrical contractors in Minnesota.
How Much Does the Minnesota Electrical Contractor Surety Bond Cost?
The $25,000 Minnesota Electrical Contractor surety bond costs either $250 per year or $25 per month.
How Does Minnesota Define “Electrical Contractor”?
The DLI defines electrical contractor as any independent business who performs the work of “installing, altering, repairing, planning, or laying out of electrical wiring, apparatus, or equipment for electrical light, heat, power, technology circuits or systems, or other purposes.”
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Electrical Contractors Apply for a License in Minnesota?
Contractors in Minnesota must navigate several steps to secure their Electrical Contractor License. Below are the general guidelines, but contractors should refer to the DLI’s licensing page for details on the process.
License Period – The Minnesota Electrical Contractor license expires on the last day of February of even numbered years (2022, 2024 etc) and must be renewed before the expiration date
Step 1 – Obtain a Master License
Contractors must employ at least one individual who has an active Master Electrician License. To obtain a Master Electrician License, individuals must complete the application, and pass the required licensure exam. All Master Electrician license applicants must:
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- Hold a bachelor’s degree in electrical engineering; or
- Have at least one year’s experience as a licensed journeyman; or
- Shall have at least five years’ experience laying out, supervising and installing wiring, apparatus, or equipment for electrical light, heat, and power.
Step 2 – Purchase Insurance
Electrical Contractors must purchase liability insurance with the following minimum limits:
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- $100,000 per person
- $300,000 per occurrence
- $50,000 for property damage
Contractors with employees must also purchase workers’ compensation insurance
Step 3 – Purchase a Surety Bond
Contractors must purchase and maintain a $25,000 electrical contractor bond
Step 4 – Complete the Application
All new contractor regulatory license applications and contractor regulatory license renewal applications should be completed online. Completed applications should include the following items:
How Does a Minnesota Electrical Contractor Renew Their License?
Electrical contractors can renew their license online here. The Minnesota Electrical Contractor license expires on the last day of February of even numbered years (2022, 2024 etc) and must be renewed before the expiration date
What Are the Insurance Requirements for the Minnesota Electrical Contractor License?
The State of Minnesota requires electrical contractors to obtain liability insurance with the following minimum limits:
- $100,000 per person
- $300,000 per occurrence
- $50,000 for property damage
Contractors with employees must also obtain workers’ compensation insurance. All electrical contractors must purchase and maintain a $25,000 Electrical Contractor Bond.
How Do Minnesota Electrical Contractors File Their Bond?
Contractors should mail the completed bond form, including the power of attorney, to the following address:
Minnesota Department of Labor and Industry
Construction Codes and Licensing Division
Licensing and Certification / Electrical
PO Box 64227
St. Paul, MN
The Electrical Contractor surety bond requires signatures from both the surety company and the contractor. The surety company should include the following information on the bond form:
- Legal name, address, and phone number of the entity/individual(s) buying the bond
- Surety company’s name, address, and phone number
- License term
- Date the bond is signed and sealed
What Can Contractors Do to Avoid Claims Against the Minnesota Electrical Contractor Bond?
To avoid claims on the Electrical Bond, contractors must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Honor all contractual agreements
What Other Insurance Products Can Agents Offer Electrical Contractors in Minnesota?
Minnesota requires electrical contractors to obtain liability insurance. Contractors with employees will also need to purchase workers’ compensation insurance. Bonds are our only business at BondExchange, so we do not issue any form of 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 Minnesota Electrical Contractor Customers?
Minnesota conveniently provides a public database to search for active electrical contractors in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.