Surety Bond Encyclopedia

Home Improvement Contractor (Nationwide) Bond - Statewide in New Jersey

Brief Summary

New Jersey home improvement contractors registered for years with only insurance on file. That changed when P.L. 2023, c. 237 was signed on January 8, 2024. Now every registered home improvement business needs a compliance bond, letter of credit or other approved security, and a surety bond meets the requirement without tying up cash or a bank credit line.

Every New Jersey home improvement contractor business must keep a compliance bond or other approved security in force for its whole registration period under N.J.S.A. 56:8-142. The minimum is $10,000, $25,000 or $50,000, depending on contract size and the value of contracts performed in the previous 12 months. Registration is with the Division of Consumer Affairs, which also requires $500,000 per occurrence of commercial general liability insurance.

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How to Apply for a Home Improvement Contractor (Nationwide) Bond:

Work out your tier from your largest contract value and your contract volume over the previous 12 months.
Business legal name and New Jersey contractor registration details for the bond.
Owner information for the surety's credit review.
Executed compliance bond from a surety authorized to transact business in New Jersey.
Certificate of commercial general liability insurance showing at least $500,000 per occurrence.
Proof of workers' compensation coverage unless exempt, submitted with the bond when the Division asks for proof of compliance, including at renewal.

Detailed Information About the New Jersey Home Improvement Contractor (Nationwide) Bond:

The amount is not one flat figure

N.J.S.A. 56:8-142, as amended by P.L. 2023, c. 237, sets three minimums for the compliance bond, letter of credit or other security.

$50,000 for services under a contract valued at more than $120,000, or for contracts performed in the previous 12 months valued at a minimum of $750,000.
$25,000 for services under a contract valued between $10,000 and $120,000, or for contracts performed in the previous 12 months valued between $150,000 and $750,000.
$10,000 for services under a contract valued at less than $10,000, or for contracts performed in the previous 12 months valued at less than $150,000.

The statute looks at both the size of a contract and your twelve month volume. A small remodeler who signs one large job can move up a tier. If either measure points higher, confirm with the Division which amount it expects before the bond is issued. The Division may also adjust the dollar amounts for a business that provides only limited specialty services.

Who has to register, and who does not

No contractor business may offer or perform home improvements without registering with the Division of Consumer Affairs, and registration is renewed annually under N.J.S.A. 56:8-138. N.J.S.A. 56:8-140 exempts builders registered under the New Home Warranty and Builders' Registration Act, people working on property they or a family member own or that belongs to a bona fide charity or other nonprofit, state licensed professionals such as architects, engineers, electrical contractors and master plumbers working within their scope, community association employees, public utilities, licensees under N.J.S.A. 17:16C-77, and home improvement retailers with a net worth of more than $50,000,000.

What the compliance bond covers

The security covers penalties the Division assesses for violations of the Contractors' Registration Act, N.J.S.A. 56:8-136 et seq. It is not payable for treble damage claims under the Consumer Fraud Act. Total liability cannot exceed the bond amount, and the business must promptly replenish the bond to the extent claims are paid. Cancellation or nonrenewal does not take effect until the contractor business receives at least 10 days written notice from the surety. The surety must be authorized to transact business in New Jersey.

Insurance, fees and contracts

Registered businesses must carry commercial general liability insurance of at least $500,000 per occurrence on an occurrence form and file proof with the Director, plus workers' compensation unless exempt by law. N.J.A.C. 13:45A-17.14 sets the registration fee at $110 initially and $90 on renewal. Every home improvement contract for a purchase price over $500 must be in writing under N.J.S.A. 56:8-151.

Eligibility and Requirements for a New Jersey Home Improvement Contractor (Nationwide) Bond:

Compliance bond, irrevocable bank letter of credit, or other security acceptable to the Division of $10,000, $25,000 or $50,000.
Security kept in force for the entire registration period and replenished after any paid claim.
Commercial general liability insurance of $500,000 per occurrence.
Workers' compensation insurance unless exempt by law.
Annual registration with the Division of Consumer Affairs, $110 initial and $90 renewal under N.J.A.C. 13:45A-17.14.
Written contracts for any home improvement over $500.

New Jersey Home Improvement Contractor (Nationwide) Bond FAQs:

Which bond amount do I need?

$50,000 for a contract over $120,000 or at least $750,000 in contracts over the previous 12 months. $25,000 for contracts between $10,000 and $120,000 or between $150,000 and $750,000 over 12 months. $10,000 for contracts under $10,000 or less than $150,000 over 12 months.

I have been registered for years with just insurance. Why do I need a bond now?

P.L. 2023, c. 237, signed January 8, 2024, amended N.J.S.A. 56:8-142 to require a compliance bond, letter of credit or other approved security from every contractor business engaged in home improvement or home elevation services.

Can a customer collect on this bond?

The statute says the security covers penalties assessed by the Division for violations of the Contractors' Registration Act and is not payable for treble damage claims under the Consumer Fraud Act.

Am I exempt?

You may be if you are a builder registered under the New Home Warranty and Builders' Registration Act, are working on your own or a family member's property, are a state licensed professional such as an electrical contractor or master plumber working within your license, or fall within another exemption in N.J.S.A. 56:8-140.

Can I post a letter of credit instead of a bond?

Yes. The law accepts an irrevocable letter of credit issued by a bank, or securities, moneys or other security acceptable to the Division. A surety bond leaves your cash and bank credit line free for the business.