Being a contractor can be lucrative and rewarding, but it doesn’t come without its fair share of liabilities and dangers. Whether you’re a general contractor or work in a specialized field, most states (but not all) require that you obtain a license in order to safely practice your trade.
But what’s a contractors license, and what steps must you take to acquire one? Are there different types of contractor licenses to choose from?
After reading this guide, you’ll know exactly what you need to do to get your state license.
What is a contractor?
The vast majority of contracting jobs fall within some category of the construction industry. This industry is responsible for building, repairing, or replacing a variety of civil and residential engineering projects, including:
Naturally, projects like this require significant experience, coordination, and planning, especially if you want the work to last for years and remain safe to use. To ensure public safety, federal, state, and local governments outline stringent building codes and regulations that must be followed.
In addition, each state outlines its own licensing procedures.
What is a general contractor license?
Because construction projects have significant inherent risks and dangers, most states require that contractors obtain a license. Why? Because it’s a way contractors can demonstrate competency in their trade and allots them legal authority to operate a business where they directly supervise risky activities, such as:
To guarantee safety, most contractor licensing processes are drawn out affairs involving several steps. Depending on the state and the type of contractors license, these requirements could include:
- Taking required classes (some states have hourly requirements)
- Passing trade, business, and law exams
- Registering with the proper authoritative body
- Paying fees
- Providing proof of:
- Age (must at least be 18)
- Citizenship (must provide passport, Social Security, or state ID)
- Relevant work experience
- Insurance (workers’ comp, general liability, or professional liability)
- Surety bonds
- Financial statements
If the license is granted, a contractor receives a unique license number that they can then list on their quote sheet, website, or social media. It acts as proof to the public that they’re operating within the state authority’s good graces.
In other words, it’s proof that they’re a professional.
Types of contractors and licenses
Today, there are several different types of contractors licenses and positions, 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. There are several subcategories, including civil, mechanical, or electrical engineering.
Common tasks associated with general engineering contractors include:
- Installing pipelines
- Water power
- Land leveling
- Flood control
Class B: General building contractor – General contractors are usually tasked with oversight, management, and coordination of an entire project. Depending on the professional, they may focus on:
- Commercial contracting
- Residential contracting
- Commercial and residential contracting (dual)
Oftentimes, a general contractor will hire subcontractors to perform particular tasks that require special licensing, knowledge, or skill sets. Although they may handle some of the physical labor, more often than not, a general contractor’s primary responsibility is overseeing an entire project from beginning to end.
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 as a specialist. Common specialty contractors include:
- Insulation and acoustical
- Moving and demolition
- Hazardous substance removal
- Fire protection
- Locks and security
How to get a general contractor license
Because each contracting job and state has different licensing requirements, the steps for one type of contractors license won’t be the same as they are for another.
For example, in California, a general contractor would have to take the following steps to obtain their general contractor license:
- Complete application and pay $330 fee
- Pass the application exam
- Provide a California business license and Tax ID (if LLC or Corporation)
- Give a fingerprinting live scan
- Pass a “Law and Business” exam
- 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)
Some states, such as Illinois, allow you to operate without a state general contractor license; however, there may be certain counties or cities that have their own specific requirements. Because it varies on a state-by-state basis, it would be smart to consult your state government’s website for more information.
Protect your contracting business
Most states that have licensing standards require a contractor to show proof of general liability insurance. But, even if your state doesn’t ask for proof of insurance, walking onto a jobsite (one filled with inherent risks) without it isn’t recommended.
Unlike a contractors license, getting a contractor insurance policy with Thimble takes no time at all. In less than 60 seconds, you can go from exposed to liability to having proof of insurance on hand. With our general liability policy, we can help protect against third-party claims of bodily injury and property damage.
On-demand insurance with Thimble is flexible, affordable, and tailored to you. Just click “Get a quote” or download the Thimble app, breeze through a few questions about your business, and we’ll generate a quote. From there, you can make your purchase. You can do all of this in 60 seconds. It’s that fast.
Getting your contractors license
While getting your contractors license takes time, there are resources out there that can help. For instance, you can enroll in a contractor license school that will walk you through the entire process (They might 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.
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 at all. With general liability insurance, you’ll be prepared for whatever work (and life) throws your way.
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.
Protecting your business with insurance is key but you also need to manage expenses. We’re breaking down the cost of CGL for contractors. Learn more.