Surety Bond Encyclopedia

Plumbing Contractor ($40,000) Bond - City of Hendersonville, TN in Tennessee

Brief Summary

Hendersonville will not issue a plumbing permit until a $40,000 Permit Bond in your name is on file with the Codes Department. You pay a yearly premium instead of tying up $40,000, the bond is written on the city's own Permit Bond form, and once it is on file it covers every plumbing permit you pull in the city.

The City of Hendersonville, Sumner County, Tennessee requires every plumbing contractor pulling permits in the city to keep a $40,000 Permit Bond on file. The amount is flat. It applies to plumbing, electrical and gas or mechanical work regardless of the contract size, so the $10,000 bond that covers small building jobs does not apply to plumbers. The bond must be in the same name as the state license and the permit.

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How to Apply for a Plumbing Contractor ($40,000) Bond:

Confirm the job is inside the City of Hendersonville in Sumner County, Tennessee, not the county or a neighboring city.
Hold the right state credential: an LLP for plumbing projects under $25,000, or a state contractor's license with a CMC or CMC-A classification for projects of $25,000 or more.
Have the business name exactly as it appears on your state license and permit.
Complete the bond application and review the quoted premium.
Pay the premium and receive the executed $40,000 bond on the City of Hendersonville Permit Bond form, sealed with the power of attorney attached.
Sign as principal and send the bond to the Department of Codes Administration, 101 Maple Drive North, Hendersonville, TN 37075.
Provide proof of workers' compensation insurance or a notarized exemption affidavit, and check whether you need a city business license.

Detailed Information About the Tennessee Plumbing Contractor ($40,000) Bond:

The amount does not drop for small jobs

This is where most plumbers get caught. Hendersonville's Building Department sets permit bonds by trade and job size. General building contractors post $10,000 for contracts or bids under $25,000 and $50,000 at $25,000 and over. Excavation and pool contractors post $50,000. Electrical, gas or mechanical and plumbing contractors post $40,000, and the city's contractor requirements sheet says that figure applies regardless of the amount of the contract or bid. A plumber doing nothing but small repair jobs still posts the full $40,000.

Who posts it and what it covers

The principal is the plumbing contractor, and the obligee is the City of Hendersonville, Sumner County, Tennessee. Contractors register under Section 20, Chapter 10 of the Hendersonville Municipal Code, as cited on the city's Permit Bond form. The bond guarantees that the contractor will comply with all codes, laws and ordinances of the city, including its plumbing codes, and it answers for damage to property and the cost of repairs property owners incur when work does not comply. The surety's total liability never exceeds the $40,000 face amount, no matter how many claims are made or how long the bond runs.

State license versus LLP

The city bond sits on top of state licensing. Under the Tennessee Board for Licensing Contractors, a plumbing project of $25,000 or more, counting labor and materials, requires a state contractor's license with a CMC or CMC-A classification. Smaller plumbing projects may be done by a Limited Licensed Plumber (LLP). Either way, the name on the Permit Bond has to match the name on the state license and the permit.

Form and filing

The bond is written on the city's Permit Bond form. The surety must be listed with the U.S. Treasury or be a Tennessee domestic insurance company, the seal must be affixed and a power of attorney attached. The contractor signs as principal through a proprietor, partner or corporate officer. Send the completed form to the Department of Codes Administration, 101 Maple Drive North, Hendersonville, TN 37075. The surety can cancel on 10 days written notice, but it stays liable for work done under permits issued before the cancellation date.

Other items the city asks for

Every contractor must show proof of workers' compensation insurance or sign a notarized affidavit stating the business is exempt under state law. A City of Hendersonville business license may also be required, whether or not your shop is located inside the city.

How premium is set

The premium is a yearly charge set by the surety after underwriting. It is based mainly on the owner's personal credit, along with time in business and any prior bond claims. Stronger credit brings a lower rate.

Eligibility and Requirements for a Tennessee Plumbing Contractor ($40,000) Bond:

Bond amount of $40,000 for plumbing work, regardless of contract size.
City of Hendersonville, Sumner County, Tennessee named as obligee.
Surety listed with the U.S. Treasury or a Tennessee domestic insurance company.
Surety seal affixed and power of attorney attached.
Principal name matching the state license and the permit exactly.
Owner credit review, which mainly sets the premium rate.

Tennessee Plumbing Contractor ($40,000) Bond FAQs:

I only do service calls and small repairs. Can I post the $10,000 bond instead?

No. The $10,000 Permit Bond is for building contracts or bids under $25,000. Hendersonville requires a $40,000 Permit Bond for plumbing, electrical and gas or mechanical work regardless of the contract amount.

Does my state license or LLP replace the city bond?

No. The state credential and the city Permit Bond are separate requirements. You need the right state credential for the size of the job and the $40,000 bond on file with the city, and the names on both must match.

Is this the same as Hendersonville, North Carolina?

No. This bond is for the City of Hendersonville in Sumner County, Tennessee. The obligee on the form is the City of Hendersonville, Sumner County, Tennessee, and it is filed with that city's Department of Codes Administration.

What happens if the surety cancels the bond?

The surety must give 10 days written notice. It remains liable for work done under any permit issued before the termination date, but you cannot pull new permits until a replacement bond is on file.

What will the bond cost?

The surety quotes a yearly premium after reviewing the owner's credit, time in business and claim history. Better credit means a lower rate, and most plumbers are quoted quickly.