Business and Financial Responsibility, Bonding, and Contractor Obligations
This domain tests the business side of holding an A-23 license: the surety bond, financial capacity, insurance, payment obligations, recordkeeping, and the consequences of letting those safeguards lapse.
Bond
NRS 624.270 requires a contractor’s surety bond. The Board sets the amount, generally tied to the license monetary limit. The bond protects eligible claimants harmed by the contractor’s failure to perform or pay; it is not a substitute for liability insurance. If the bond is canceled or expires, the license can be suspended until a replacement is filed and the Board reinstates.
Financial responsibility
Applicants and licensees must demonstrate and maintain financial responsibility. Material changes-bankruptcy, judgments, or discipline in another jurisdiction-must be reported. A-23 firms also carry workers’ compensation for employees and should maintain general liability and pollution or abatement coverage appropriate to the work.
Contractor obligations
- Pay subcontractors, suppliers, and employees; unpaid claims can lead to Board complaints and discipline.
- Use written contracts and required disclosures; keep job files, waste manifests, and payroll records.
- Do not commingle project funds; use project accounts and pay according to the contract.
- Complete work or provide proper notice; abandonment is a disciplinary ground.
Worked example
An A-23 contractor’s surety notifies NSCB that the bond will cancel for nonpayment. The license is suspended. The contractor cannot legally bid or work until a new bond is filed and the Board reinstates the license. Continuing to work during suspension is unlicensed contracting.
Traps
- Thinking the bond is a warranty for defective work.
- Letting the bond lapse during a project.
- Treating workers’ compensation as optional when employees exist.
- Ignoring a civil judgment that must be reported.