Minnesota Mechanical Contractor Bond: A Comprehensive Guide

February 15, 2021

Minnesota Mechanical Bond

This guide provides information for insurance agents to help mechanics on Minnesota Mechanical Contractor Bonds

At a Glance:

  • Average Cost: $100 per year
  • Bond Amount: $25,000
  • Who Needs It: All mechanical contractors operating in the State of Minnesota
  • Purpose: To ensure the public will receive compensation for any damages should the contractor fail to honor contractual agreements
  • Who Regulates Mechanical Contractors in Minnesota: The Minnesota Department of Labor and Industry (MDLI) requires mechanical contractors to purchase a bond. However, contractors will need to adhere to local licensing guidelines in the municipalities where they conduct business

Background

Minnesota Administrative Rule 326B.197 requires mechanical contractors to purchase a surety bond prior to conducting business operations. The Minnesota legislature enacted the bonding requirement to ensure that mechanics engage in ethical business practices. There is no state licensing licensing requirement for mechanical contractors. However, contractors will need to follow all local licensing guidelines in the municipalities where they conduct business.

What is the Purpose of the Minnesota Mechanical Contractor Bond?

Minnesota requires contractors to purchase the Mechanical Contractor Bond prior to conducting business operations. The bond ensures that the public will receive compensation for financial harm if the contractor fails to honor contractual agreements. In short, the bond is a type of insurance that protects the public if the contractor acts unethically.

Minnesota Mechanical Contractor Bond Form

Minnesota Mechanical Contractor Bond Form

How Can an Insurance Agent Obtain a Minnesota Mechanical Contractor Surety Bond?

BondExchange makes obtaining a Minnesota Mechanical 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? Enroll 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.

Is a Credit Check Required for the Minnesota Mechanical Contractor Surety Bond?

No, a credit check is not required for the Minnesota Mechanical Contractor Bond. Because this bond is considered relatively low-risk, the same low rate is offered to all mechanical contractors in Minnesota.

How Much Does the Minnesota Mechanical Contractor Surety Bond Cost?

The $25,000 Minnesota Mechanical Contractor surety bond costs just $100 per year

How Does Minnesota Define “Mechanical Contractor”?

The DOLI defines mechanical contractor as any independent business who performs “gas, heating, ventilation, cooling, air conditioning, fuel burning or refrigeration work in Minnesota.”

Do Mechanical Contractors Need to Obtain a License in Minnesota?

Minnesota does not require mechanical contractors to obtain a state-level license. However, contractors must complete a business registration application and submit it when filing their bond.

What Are the Insurance Requirements for Minnesota Mechanical Contractors?

The State of Minnesota does not require mechanical contractors to obtain any form of liability insurance. Contractors with employees must obtain workers’ compensation insurance. All mechanical contractors must purchase and maintain a $25,000 Mechanical Contractor Bond.

How Do Minnesota Mechanical Contractors File Their Bond?

Contractors should submit their completed bond form, including power of attorney, online here. Contractors must also submit a business registration application, including a $100 filing fee, with their bond. The bond is valid for two years from the date of submission and must be renewed prior to the expiration date.

The Mechanical 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
  • Date the bond goes into effect
  • Date the bond expires
  • Date the bond is signed and sealed

What Can Contractors Do to Avoid Claims Against the Minnesota Mechanical Contractor Bond?

To avoid claims on the Mechanical Contractor Bond, contractors must follow all bond provisions, 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
  • Follow all building code regulations

What Other Insurance Products Can Agents Offer Mechanical Contractors in Minnesota?

Minnesota does not require mechanical contractors to obtain any form of liability insurance. However, many reputable contractors will seek to obtain this insurance anyway. Contractors with employees will 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 Mechanical Contractor Customers?

Minnesota conveniently provides a public database to search for active mechanical 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.

2021-12-28T15:22:22-05:00