What is a Statement of Bonding Ability?

This is a statement from the surety company that deems the contractor eligible for a performance bond if needed up to the specified amount. For North Carolina electrical contractors, a $60,000 (for Intermediate) or $150,000 (for Unlimited) performance bond is required. 

The surety company will be signing off on the following:

Subject to your normally expected individual job underwriting procedures and your right not to exceed this applicant’s line of bonding credit, does your company feel that this applicant would be eligible on this date for a bond in excess of {$60,000 for Intermediate or $150,000 for Unlimited}? Note: This is strictly a bonding ability statement as of the date shown above and in no way commits your company to the issuance of a bond of any type to this applicant. 

  1. Unlimited (U) Classification Applications: Applicants wishing to obtain an Unlimited license shall furnish a $150,001.00 Unlimited Bonding Ability Statement with Power of Attorney attached; OR a letter showing a line of credit issued by a bank, savings bank, or savings and loan association pursuant to G.S. 87-43.2(a)(4).
  2. Intermediate (I) Classification Applications: Applicants wishing to obtain an Intermediate license shall furnish a $60,001.00 Intermediate Bonding Ability Statement with Power of Attorney attached; OR a letter showing a line of credit issued by a bank, savings bank, or savings and loan association pursuant to G.S. 87-43.2(a)(4).

So what is a Surety Bond?

This is a type of financial coverage that guarantees that the contractor will fulfill their contractual obligations. The project owner can require a business or individual to purchase a bond in the event that some type of obligation is failed to be met. There are four main types of surety bonds – Contract, Commercial, Fidelity, Court.
The surety is the bond issuing company that pays the bond in the event of a claim. This can be from a bank or your insurance company.
For example: If the general contractor doing work for a private school went to a bond provider to purchase a bond, that bond provider would be the surety as it is the one underwriting and financing the bond. They would also be the one to pay the private school if performance obligations are not met by the general contractor.

At what point do I need to get one?

After you’ve taken your exam and are ready to activate your license. You’ll need to purchase a statement of bonding ability to turn in with your license application to the NC Board. This must include the legal name and address of the one buying the statement, surety company’s name and address, and the type of financial statement required by the surety company. Your application must be signed with the name of the bonding company and a company representative (or the signing agent must attach Power of Attorney authorizing them to sign for the bonding company).

Where do I get one?

Your insurance company may be familiar with this requirement already. In the case that they aren’t, feel free to contact us at JCR Productions, Inc for some resources.