Contractor's Bond

On January 8, 2024, Governor Murphy signed into law P.L. 2023, c. 237, which: amended the Contractors’ Business Registration Act. While this changed the licensing requirements, we wanted to make you aware of the insurance requirements. 

While home improvement and home elevation contractors were previously only required to carry general liability insurance, the new law requires contractors obtain Workers’ Compensation   Insurance unless you fall under the exemption. Specifically, contractors must secure Workers’ Compensation Insurance before renewing their license. 

One of the most notable changes under the new law is the introduction of a compliance bond. Contractors must now establish this fund to cover penalties and infractions that may arise during the course of their business. Pursuant to N.J.S.A. 56:8-142, the required amount of the fund is determined by the valuation of the contracts the contractor is working on, as follows: 

• A $10,000 fund is required for the performance of services pursuant to a contract valued at less than $10,000 or for the performance of services, in the previous 12 months, for contracts valued less than $150,000. 

• A $25,000 fund is required for the performance of services pursuant to a contract valued between $10,000 and $120,000 or for the performance of services, in the previous 12 months, for contracts valued between $150,000 and $750,000; and 

• A $50,000 fund is required for the performance of services pursuant to a contract valued at more than $120,000 or for the performance of services, in the previous 12 months, for contracts valued at a minimum of $750,000 

The state will require you submit proof of compliance with the new licensing, insurance, and bond requirements along with your application. In view of this, please feel free to contact our office to discuss the additional coverages you may be required to carry. We will be happy to obtain quotes for these coverages for you. As always, we appreciate your business!