Bonds

(1) Bonds shall be written on a form approved by the Insurance Commissioner, available through the Board, which shows the name of the principal as it appears on the license application. (2) Description of Bonds. (a) Surety Bond. 1. A surety bond shall be in the amount of ten thousand dollars ($10,000.00), issued to a home improvement contractor by an approved insurance company authorized to do business in Tennessee, for the benefit of a claimant, who has been damaged by the contractor’s breach of a home improvement contract. If the bond ceases to be in effect, the home improvement contractor’s license shall become invalid. 2. The Board may refuse to accept a bond written for a home improvement contractor by a surety which has failed to meet its obligations under this subtitle. GENERAL REGULATIONS FOR HOME IMPROVEMENT CONTRACTORS CHAPTER 0680-07 (b) Letter of Credit. 1. A bond in the form of an irrevocable letter of credit shall be an agreement, between a financial institution and a home improvement contractor on record at the Board wherein the FDIC insured financial institution agrees to extend an irrevocable line of credit amounting to ten thousand dollars ($10,000.00), for the purpose of honoring claims filed with the Board. 2. The irrevocable letter of credit shall show the name of the financial institution extending the credit and the name of the applicant or home improvement contractor to whom the letter of credit was issued as it appears on the applicant’s or home improvement contractor’s license application. (3) Release of Bond. A bond may not be released until whichever occurs last: (a) One (1) year after the inactivation, expiration or revocation of home improvement contractor’s license; (b) After the pending claims against the licensee filed during the period described in 3(a) have been heard and satisfied, or dismissed.