Bonding in Illinois

A surety bond is a 3-party promise. The contractor (the principal) pays a surety company for a bond that a customer, subcontractor, or the state (the obligee) can draw against if the contractor breaks the rules the bond covers. The surety pays valid claims up to the bond face value. The contractor then owes the surety for what the surety paid out. A bond protects the public. It is not insurance for the contractor. Illinois uses bonds in 4 distinct places, and contractors regularly confuse them. Keep them separate. 1. Illinois Roofing Contractor bond (225 ILCS 335/3). The Illinois Roofing Industry Licensing Act requires every licensed roofing contractor to file and maintain a continuous surety bond with the Illinois Department of Financial and Professional Regulation. The bond amount is $10,000 for a limited license (shingle and other non-commercial work) and $25,000 for an unlimited license (commercial roofing). IDFPR is the obligee. The bond covers consumer harm from roofing work that violates the Act. 2. IDPH Plumbing Contractor bond (225 ILCS 320). The Illinois Plumbing License Law requires a registered plumbing contractor to file a $20,000 surety bond with the Illinois Department of Public Health, or a letter of credit in the same amount. IDPH is the beneficiary. The bond pays to correct noncomplying plumbing work and compensate persons injured or suffering financial loss from a violation of the Illinois Plumbing Code, capped at $20,000. The form is IDPH-specific, expires September 30 of the current year, and is not continuous. 3. Public works payment and performance bonds (30 ILCS 550). The Illinois Public Construction Bond Act requires a contractor on a public works contract to furnish a bond for the full contract amount, guaranteeing payment to subcontractors and suppliers and performance of the contract. Effective January 1, 2024, Public Act 103-570 raised the mandatory bond threshold from $50,000 to $150,000 of contract value. That $150,000 threshold is scheduled to revert to $50,000 on January 1, 2029. Local government units may still require bonds on contracts at or below the threshold by resolution or ordinance. These bonds are project-specific, separate from any license bond. 4. Local contractor license bonds (Chicago and other municipalities). Home-rule cities in Illinois impose their own contractor bond requirements on top of state licensing. Chicago's Municipal Code requires general contractor license classes to post a surety bond before the city issues the license, with bond amounts set by contractor class in the code. Amounts and conditions differ by city, so confirm with the specific building department before bidding work inside municipal limits. Premium math. A surety charges an annual premium, typically 1% to 3% of the bond face value for a contractor with strong credit and no prior claims. Weaker credit, tax liens, prior surety losses, or a new business can push the rate to 5% to 10% or more. A $20,000 IDPH plumbing bond at 2% is $400 per year. A $10,000 roofing bond at 2% is $200 per year. Public works payment and performance bonds are priced per job, usually 0.5% to 3% of the contract price. What claims look like. For a roofing or plumbing license bond, a claimant files a complaint with the licensing agency. If the agency finds a violation and restitution is ordered, or a court issues an unpaid judgment within the bond's coverage, the claimant can seek recovery from the bond. The surety pays, then pursues the contractor. Bond, insurance, and workers' compensation are separate requirements. An Illinois contractor carries the applicable state or local license bond, general liability and property damage insurance at the levels required by statute, rule, or local ordinance, and workers' compensation under the Illinois Workers' Compensation Act. Confirm each requirement against the current statute and rule before you assume you are compliant.