Attention Contractors: Contractor Bond Increase in Washington State | July 1st, 2024
Understanding the Impact of Washington’s Contractor Bond Increase: HB 1534 Explained
In recent developments, Governor Jay Inslee has ushered in a significant change with the signing of HB 1534 on May 1st, 2023. This newly enacted bill aims to revise the minimums for contractor bonds, affecting both general contractors and those in specialized fields.
Increased Minimums for Contractor Bonds:
For general contractors, the minimum bond requirements have seen a substantial rise, soaring from $12,000 to $30,000. Similarly, specialty contractors now face an increased minimum, up from $6,000 to $15,000.
Contractor Bond Increases in the Past:
This isn't the first time such adjustments have occurred. The last increase took place in May 2001, setting the minimums at $12,000 and $6,000, where they have remained unchanged until now.
Reasons Behind the Change:
The driving force behind this adjustment lies in the challenges posed by escalating prices and inflation. The previous minimums often fell short of covering damages adequately. This impacted various businesses, such as subcontractors, suppliers, and equipment rental services. To address this disparity, the update in minimums became imperative in the face of the substantial cost difference between 2001 and 2024.
Effective Date and Impact:
While Governor Inslee signed the bill into effect on May 1st, 2023, the changes won't be felt until July 1st, 2024. Contractors in the State of Washington need to brace themselves for a direct impact on their bond premiums. Fortunately, bond premiums are typically modest, and the anticipated change is expected to be a few hundred dollars. Nonetheless, contractors are advised to stay up to date on developments and proactively plan for this adjustment.
Key Considerations:
It's crucial to note that the implementation date of July 1st, 2024, doesn't mean an immediate impact for all existing bond holders. If your bond is currently active and doesn't renew until January 2025, you won't experience a change until the renewal date. The revised minimums of $30,000 for contractor bonds and $15,000 for specialty bonds will apply only to new bonds or renewals after July 1st, 2024.
Stay informed, plan ahead, and navigate the evolving landscape of contractor bonds in Washington as these changes unfold. To read more about HB 1534, click here to read the final bill report. While this change can be daunting for contractors due to the premium increases, overall it it an important bill to be implemented. The overall purpose of this bill is to help protect consumers from faulty work done by contractors. Narrows Insurance will be following this bill as it moves into effect, so keep an eye out for updates. If you want more information on bonds, follow this link. If you have any questions or are wanting to get the lowest rate for your contractor bond, don't hesitate to contact one of our agents.
