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What is a contractors license?
We're breaking down the different types of contractor licenses & how to get a general contractor's license. Learn more.
- March 31, 2020
If you are a fan of home improvement shows and have a strong DIY streak, you may be considering a career as a general contractor.
In this specialized field, however, general contractor licensing requirements vary depending on the scope of work, your experience, and even where you live.
In this guide, we’ll help you understand what exactly is a contractors license, the types of contractors licenses, whether you need one, and how to get a general contractor license if your state requires it.
What is a general contractor license?
Contracting projects require significant experience, coordination, and planning. Federal, state, and local governments outline stringent building codes and regulations that contractors must follow to ensure that construction and renovation projects are safe.
On top of that, each state (and sometimes city) has its own licensing requirements so general contractors can demonstrate competency in this inherently risky trade.
Some states require a license only if the general contractor is bidding on a project that exceeds a certain amount. For instance, in California it’s $500, whereas in Georgia the ceiling is $2,500.
Elsewhere, general contractor licenses aren’t afforded at a state level, but at a city or county level. Some states also differentiate among types of general contractors, like those who work on residential projects versus commercial projects.
Types of contractors & licenses
There are several types of contractors, and each one may have its own licensing and qualification requirements. For the sake of simplicity, it’s helpful to divide contractors into their three licensing classes (A, B, C):
Class A: General engineering contractor – Also known as public work contractors, class A contractors are responsible for overseeing public works such as building bridges, railroads, freeways, airports, public parks, municipal buildings, and hospitals. They have a handful of several subcategories, including civil, mechanical, and electrical engineering.
Class B: General building contractor – General building contractors are usually tasked with the oversight, management, and coordination of an entire project. Depending on the professional, they may focus on commercial contracting, residential contracting, or both. General contractors often hire subcontractors to perform particular tasks that require special licensing, knowledge, or skill sets.
Class C: Specialty contractor – Class C contractors are specialists that handle specific jobs or tasks within a greater project. For example, a remodel may require a separate specialty contractor to handle the electrical, plumbing, roofing, paving, masonry, or carpentry. There are scores of specialty contractors, and each has its own unique licensing requirements to qualify and operate.
How to get a general contractor license
The only surefire way to understand how to get a general contractor license is to research your state and locality’s licensing requirements. From there, you’ll be led to your appropriate professional licensing board, where you’ll receive more information about your specific requirements.
Often, you’ll need to meet certain eligibility requirements before you can even apply for a license. To be eligible for a general contractor license, applicants typically need the following:
- Be at least 18 years of age
- Hold a high school diploma or higher
- Have experience working in the construction industry
- Be able to legally work in the United States
- No criminal background
If you’ve cleared those eligibility requirements, you can move onto applying for your general contractor license (if you need one!). The application process, too, differs depending on where you live.
To give you an idea of what that application might entail, let’s use the example of a general contractor in the state of California:1
- Complete application and pay $330 fee
- Pass the application exam
- Provide a California business license and Tax ID (if registered as an LLC or Corporation)
- Give a fingerprinting live scan
- Pass a Law and Business exam to show that you understand business management and construction law
- Pass secondary trade-related exam
- Pass the asbestos open-book examination
- Pay an initial licensing fee of $200
- Provide a contractor bond or cash deposit of $15,000
- Show a certificate of workers’ compensation insurance and general liability insurance (if applicable)
Other states or localities may require proof of surety bonds and/or financial statements for your business. Most require that you show proof of insurance, such as workers’ comp, general liability, professional liability, or some combination of the above. Then, if your license is granted, you’ll receive a unique license number that’s registered with the state or locality.
As we mentioned, most states or localities require proof of general liability insurance in order to obtain a license. You should obtain a Certificate of Insurance to provide to your clients along with your policy. The Certificate of Insurance names the insurer who issued your policy, the type of coverage included, and your insurance limits and deductibles, among other important information.
Even if your state doesn’t ask for proof of insurance for licensing purposes, you’ll absolutely need it when you start landing jobs. General liability insurance keeps you protected from third-party claims of bodily injury and property damage—both of which you may very well run into on a jobsite, no matter how experienced or professional you are.
Construct your career
Although getting a general contractor license is a long process, there are resources that can help you get that license.
You may consider enrolling in a contractor license school that will walk you through the entire process (and maybe even file the application for you). Or, you can reach out to your state’s contractor license board—they’re usually more than willing to help.
Now that you know the three main licensing classes, how to navigate your local licensing laws, and how to protect your new business, you’re in a good place to start your career.
With a bit of patience, the right credentials, and a thorough understanding of your state laws, you’ll be a state-recognized contractor in no time.
Source:
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.
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