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Contractor Bonds

Tennessee Contractor Bonds

Why are contractor bonds required in Tennessee?

Contractor bonds in Tennessee may be required for contractors whose projects hold a high monetary limit for their financial statements or as a requirement of obtaining a license. These bonds protect consumers from negligent or harmful activities performed by the contractors not in accordance with applicable laws and regulations.

Contractor License Bond

The Tennessee Department of Commerce and Insurance requires contractors to post a contractor bond when submitting cash-only financial statements. A $500,000 bond is required if the monetary limit for the financial statement is $1,500,000 or less, and a $1,000,000 bond is required when the monetary limit exceeds $1,500,000.

Regardless of your required bond amount, TN contractor license bonds are subject to underwriting consideration. A surety underwriter must review the bond applicant’s personal, credit, and financial history before determining whether, and at what price, a bond can be issued.

Want to learn more about the underwriting process? Visit our Definitive Guide to Surety Underwriting to get all your questions answered.

How to become a licensed TN contractor

Contractors in Tennessee looking to become licensed can utilize the Contractor’s License Application Package to begin the following process:

  1. Contractor Testing

    1. Exams cost $57.

    2. All applicants must take the Tennessee Business and Law exam.

      1. The following trade categories must also pass additional exams:

        1. Building

        2. Electrical

        3. Mechanical

        4. Masonry

  2. Financial Statement

    1. A Certified Public Accountant must either review or audit a financial statement for the entity or individual obtaining a license.

      1. Financial statements must be prepared according to the Generally Accepted Accounting Principles.

    2. A contractor license bond may be required based on the licensee’s monetary limit.

      1. Monetary limit can be determined using the worksheet for determining monetary limit.

  3. Letter of Reference

    1. A letter of reference is required of all applicants (including those with second and reinstatement licenses).

      1. These references must be completed by a past client or employer who can comment on their work/experience.

  4. Proof of Insurance

    1. A certificate of insurance must be obtained before applying for a license.

    2. General Liability

      1. Monetary Limit up to $500,000 = $100,000 of minimum coverage

      2. Monetary Limit of $501,001 to $1,500,000 = $500,000

      3. Monetary Limit exceeding $1,500,001 to unlimited = $1,000,000

    3. Workers' Compensation

      1. Required for all contractors applying for a license, unless:

        1. The contractor does not have any employees; and

        2. The license owner/employer has met the criteria to be exempt or provided proof of registration as a “Construction Services Provider” with the Secretary of State

  5. Corporations and Limited Liability Companies

    1. Corporations, limited liability companies, out-of-state corporations, or limited/general partnerships must register with the Tennessee Secretary of State’s office and submit proof of their license application.

  6. Complete the Application, including Experience and Affidavit

    1. All questions must be answered.

      1. License classification must be listed on the application.

    2. All resources must be attached.

  7. Application Process with Licensing Fee

    1. A $250 nonrefundable license fee is required for a two-year license.

      1. The application is due on the 20th of the month before the Board meets.

        1. See the Public Meetings Calendar to determine which months the board meets.

    2. Apply online or via mail to Tennessee Board for Licensing Contractors 500 James Robertson Parkway Nashville, TN 37243-1150.

  8. Board Review and Interview

    1. An interview with a board member at the meeting may be required — determine with the Board if an interview is required for you.

  9. License Issued

    1. Verify your license with the Department of Commerce & Insurance Administration License Roster within three to seven business days.

Home Improvement Contractor Bond

Tennessee home improvement contractors must obtain a license prior to doing any contractor work — including bids or price negotiations — when the project cost is $25,000 or more in total. Licensing information for projects less than $25,000 can be found on the TN Types of Licenses page.

A $10,000 home improvement contractor bond can be issued instantly online for a one-year term for $100. Utilize our multi-year discount to save time and money by purchasing multiple-year terms up front and saving 25%!

Tennessee home improvement contractors can follow the steps above to become licensed within the state.

Fire Protection Sprinkler System Contractor Bond

All fire sprinkler system firms not licensed by the Tennessee Board of Licensing Contractors must provide proof of a $10,000 contractor surety bond before applicants can register as a fire sprinkler system contractor. SuretyBonds.com can issue a $10,000 fire protection sprinkler system bond instantly online to all applicants for a $100 premium for a one-year term.

A discount is offered to customers who purchase this bond up front for a multiple-year term, meaning that instead of issuing two payments of $100 for two years of coverage, applicants can save time and money by paying $175 for two consecutive years of bond coverage at one time.

City- and County-Specific Contractor Bonds

Many cities and counties within the state of Tennessee hold contractor bond requirements for those applying for a license, permit, or registration. Don’t see the bond you need explained below? View our list at the bottom of the page of all contractor bonds available within the state.

City of Kingsport Required Contractor Bonds

All general contractors must have a City of Kingsport business license and proof of workman’s compensation insurance to purchase permits. In addition, contractors of the following classifications must post a $10,000 contractor license bond:

  • Kingsport Electrical Contractors

  • Kingsport Gas Installing Contractors

  • Kingsport Plumbing Contractors

These bonds can be purchased instantly online for a $100 premium for all applicants for a one-year term. However, a multi-year discount is available, meaning two years of bond coverage would cost $175 with one payment rather than $200 across two separately issued payments.

City of Knoxville Required Contractor Bonds

Knoxville $10,000 contractor bonds can all be issued for a $100 premium for a one-year term. However, applicants can save time and money by purchasing their bond for a multiple-year term up front with a 25% multi-year discount.

  • City of Knoxville Out-of-State Contractor Bond

    • The Knoxville Department of Finance, Business Tax Division mandates that out-of-state contractors working within the city must get a city and county business license before they can legally begin work. Contractors applying for an out-of-state contractor business license can use the Out of State Contractor Forms packet.

    • One requirement found within this packet is to post a surety bond with a minimum amount of $500, up to a maximum amount of $10,000. Contractor bonds ranging from $500 to $2,500 can be issued instantly at a rate of $20 per every $1,000 of the bond amount with a $100 minimum. However, bonds ranging from $2,501 to $10,000 are subject to underwriting consideration, meaning an underwriter must review the applicant's personal, business, and financial history before determining whether, and at what price, a bond can be issued.

City of Goodlettsville Required Contractor Bonds

  • Goodlettsville Electrical, Plumbing, Gas, or Excavation Contractor Bond

  • Goodlettsville General Contractor Bond

  • Goodlettsville Permit Bond

    • Contractors applying for a permit within the City of Goodlettsville must obtain a TN State Contractor’s license, permit bond, and proof of both workers' compensation and liability insurance. A permit bond may be required in various amounts:

      • $10,000 permit bond — issued for a $100 premium

      • $40,000 permit bond — issued for a $200 premium

      • $50,000 permit bond — issued for a $250 premium

Hamilton County Contractor License Bond

The Hamilton County Building Inspection Division requires contractors of all classifications and class levels to apply for a license. The county requires contractors to post a $1,000 contractor license bond, which can be purchased instantly online through ContractorBonds.com for a $100 premium.

Hamilton County will only issue contractors a county license with proof of a Chattanooga Trade License or a State of Tennessee reciprocal license.

Memphis and Shelby County Contractor Bond

The Memphis and Shelby County, Division of Planning and Development, Department of Construction Code Enforcement requires contractors working within either county — Memphis or Shelby — to obtain a permit before beginning work. One requirement of this permit is to post a $25,000 contractor bond, ensuring the counties that you will abide by all construction codes pertinent to your work.

This bond can be purchased instantly online for a $125 premium by all applicants for a one-year term. However, you can save time and money by purchasing this bond for a multiple-year term up front with our 25% multi-year discount. Applicants for this $25,000 contractor bond must indicate their license type on the bond application.