Fencing Company Licenses, Bonds, Contracts at a Sale

A fencing company works under customer contracts that often ask for certificates, additional insured wording and indemnity, under state or local contractor licensing that varies widely, and sometimes under bonds, especially on public work. In an asset purchase the license may not move to you (California's does not), and in a stock purchase it stays with the entity but may depend on a qualifying individual. The insurance clauses in your contracts are only as good as the endorsements behind them, so check the contract against the policy before you sign the next job. This guide is for owners who just bought a fencing company and want to know what to check in contracts, licenses and bonds, and what has to be reissued or re-confirmed after closing.

The short answer

Contracts set the insurance floor. Builders, property managers, homeowner associations and public owners often specify certificates, additional insured status, primary wording, waivers and umbrella limits.
There is no national fencing license. Licensing is state and sometimes local, and some states license fencing as its own class while others do not name it, so confirm with your state and county.
A license can depend on the company or a qualifying individual. In California it does not simply move with a sale, and other states differ, so if the seller held the license or was the qualifier, you need a plan before closing. Confirm with your state board and counsel.
A certificate is not the policy. It summarizes coverage on the day it was issued, and the endorsements control.

What do fencing contracts ask of your insurance?

Customers who hire a fence installer include homeowners, property managers and homeowner associations (HOAs), builders and developers, commercial sites, farms, and public owners. The larger the customer, the more likely the contract has an insurance article. Required limits vary by customer, so read each contract. The table covers the wording that most often needs a matching endorsement.

Common contract insurance wording and what to check on the policy
Contract asks for	What it means	What to check
Certificate of insurance	Proof of coverage on the day it was issued	A certificate is not the policy, and it grants no rights by itself
Additional insured, ongoing operations	The customer is added to your liability policy for work in progress	An Insurance Services Office (ISO) endorsement adds this; check scope and who qualifies
Additional insured, completed operations	The customer is protected after the fence is finished	A separate endorsement from ongoing operations, so a contract that asks for both needs both
Primary and noncontributory	Your policy pays first and does not ask the customer's policies to share	Works only with a written contract and must be paired with an additional insured form
Waiver of subrogation	Your insurer gives up its right to recover from a named party	Must be agreed in writing before the loss; liability, auto, workers' comp and umbrella each need their own endorsement
Indemnity (hold harmless)	You promise to cover the customer's losses from your work	The policy may narrow insured contract cover; a promise about utility strikes or boundaries can be uninsured
Umbrella limit	More liability limit above the underlying policies	Which policies it sits over, and whether the contract names a figure

See additional insured, waiver and primary wording for new owners and the additional insured glossary entry.

What does a builder's subcontract do to your policy?

Fence work for builders and developers is usually done under a subcontract written by the builder, not by you. Those documents tend to pile on requirements.

A hypothetical example. A subdivision builder's subcontract asks a fence company for additional insured status for completed operations, an indemnity for any damage to buried lines, and a $2 million umbrella. The company's policies carry additional insured status for ongoing operations only and a $1 million umbrella, and the owner does not know how the liability form treats underground damage. The owner can ask the broker whether the completed operations endorsement and the higher limit are available and what they would cost, ask what the policy says about underground damage, then price the job accordingly, or negotiate the clauses with counsel. Signing and hoping is the wrong third option, because a certificate that promises more than the policy delivers does not change what the policy pays, and the company may be in breach of the contract.

Two further points. First, have counsel read any indemnity clause, since its reach and enforceability vary by state, and your policy may not cover the promise even where it is enforceable. Second, a contract that requires you to use only subcontractors with the same insurance passes the same requirements down your own crews. See checking customer contracts against your policies and when contracts require coverage you do not have.

Which licenses and permits does a fencing company need?

No national fencing license exists. Contractor licensing is by state and sometimes by city or county, the dollar threshold that triggers a license differs, and some states license fencing as its own classification while others do not name it. In any state, ask the licensing board and your county five things:

Is fencing its own license class?
What dollar threshold triggers a license?
Who is the qualifying individual, and is the license tied to a person?
Is a local registration also needed?
Does the wiring for automatic gate operators need a separate electrical license or permit?

The four states below show the range. Confirm each on the state board's own page before you rely on it.

How four states treat fence work
State	How fencing is treated	What to confirm
California	Fencing is classification C-13. A license is required at an aggregate price of $1,000 or more or when a permit is needed (Business and Professions Code section 7048), plus a $25,000 bond and workers' compensation proof (or a no-employee exemption).	The current threshold on the contractors board's own page
Nevada	Fencing appears in two classifications: C-25 for fencing and equipping playgrounds, and A-21 for fencing and guardrails under general engineering.	Whether C-25 covers general residential and commercial fence work
Washington	Construction contractors register with the Department of Labor and Industries and post a surety bond, but the statutory definition of contractor does not name fences.	How a fence installer registers
Florida	The contractor statute lists specialty categories such as roofing and pool but does not name fencing.	How the state board and your county license fence work

Whether gate operator wiring needs its own license is not settled here, so ask your state board.

Permits are local. Height limits, setbacks, sight lines and pool barrier rules are usually set by the city or county. A company that pulls permits, or skips them, leaves a record that you inherit, so ask for permit files on recent jobs. Licensing and permit questions are for your state and local authorities and deal counsel, not for an insurance agency. See licenses, permits and registrations when buying a business.

Which bonds come up, and are they insurance?

Two kinds of bond appear around fence work. A license bond is the one a state may require to hold a contractor license. Bid, performance and payment bonds appear on public work such as highway fence and guardrail, school and park fencing, or prison and military perimeter jobs, where federal and state laws often require them above set thresholds, along with prevailing wage rules.

A bond is not insurance for you. It is a three-party arrangement in which a surety backs your promise to the owner of the project, and if the surety pays a claim, it expects to be repaid by you and, usually, by the owners who signed the indemnity agreement. A change of ownership usually means the surety re-underwrites the account and new owners typically sign a new indemnity agreement. A seller's personal indemnity to a surety generally survives the sale, and a transfer clause in the purchase agreement does not by itself release it. See whether surety and license bonds transfer, the surety bonds page and surety bond versus liability insurance.

What transfers at a sale and what must be reissued?

The answer turns on whether you bought stock or assets. In a stock or membership interest purchase, the legal entity stays the same, so its contracts, policies, licenses and liabilities stay with it. In an asset purchase, you generally take only the assets and liabilities the agreement names, although successor liability rules can sometimes reach a buyer who keeps the name, crews and customers, and the seller's policies and licenses do not simply transfer. Ask deal counsel.

If the company leases its yard or shop, the lease usually asks for general liability with the landlord named as an additional insured and sometimes property insurance on improvements. Lease terms vary, and an asset purchase needs the landlord's consent to assign, so read the insurance and assignment clauses before closing.

Contract, license and bond items at a fencing company sale
Item	In a stock purchase	In an asset purchase	What to do
Customer contracts	Stay with the entity, but a change of control clause can be triggered	An anti-assignment clause may need the customer's consent	List contracts with consent or change of control language
Contractor license	Stays with the entity, but a qualifying individual may leave	In California the licensing statute does not provide for a license to move with a sale. Other states differ, so confirm yours with your state board	Plan a new qualifier or license before closing
Bonds and indemnity	Surety re-underwrites; new indemnity expected	New bond in the buyer's name	Call the surety before closing
Insurance policies	Stay, but the insurer must be told	Do not transfer without insurer consent	Have your own policies in force at closing
Yard lease	Entity stays tenant, but a change of control clause may apply	Needs landlord consent to assign	Confirm the landlord's insurance requirements
Open deposits and warranties	Remain obligations of the entity	Often land on you in practice because customers call the company they know; the purchase agreement decides who pays	List them and decide who funds them

If the seller held the license or was the qualifying individual, note the Small Business Administration (SBA) rule: in an Initial Acquisition under a 7(a) loan the seller generally may not stay on as an officer, director, stockholder or employee, though the business may contract with the seller as a consultant for up to 24 months in total. That can conflict with a seller-qualifier plan, so raise it early. See when the seller holds the contractor license.

How do you handle certificates in the first month?

For a fencing company the first rows in the tracker are usually builder subcontracts and homeowner association or property manager accounts, since those customers commonly ask for completed operations additional insured status. Work through it in order:

Build a simple tracker: every active customer contract, its insurance requirements, the policy that satisfies each one and the certificate on file.
Ask your broker to reissue certificates under the correct named insured, and confirm each endorsement exists before a certificate mentions it.
If a contract asks for more than the policy provides, ask the broker what is available and what it would cost before you sign.

The first-month certificate tracking guide gives a routine, the guide to certificates the seller issued covers old ones, and the coverage gaps guide for fencing companies covers what to test in the policies behind them. If a contract asks for more than the policy provides, Morrow can review your inherited policies against the contract language and request quotes for the missing pieces. Any new terms depend on carrier underwriting.

Keep reading

Frequently asked questions

Do I need a contractor license to run a fencing company?

It depends on the state, and sometimes the city or county. California licenses fencing as classification C-13 and requires a license at $1,000 or more of work or when a building permit is needed (Business and Professions Code section 7048). Other states use different classes or do not name fencing. Confirm the current threshold with your state board before you take work.

Does the seller's contractor license transfer to me?

It depends on the state and the deal. California, for example, does not provide for a contractor license to move with a sale, and many licenses are tied to a qualifying individual. In a stock purchase the entity keeps its license. Plan for a new qualifier or license before closing and ask counsel.

What insurance do builders ask fence contractors for?

Commonly a certificate, additional insured status for ongoing and completed operations, primary and noncontributory wording, a waiver of subrogation and an umbrella limit. Required limits vary by customer, so read each contract.

Is a surety bond the same as insurance?

No. A bond protects the project owner, and if the surety pays a claim it expects repayment from you and usually from the owners who signed the indemnity agreement.

A customer wants a certificate that names them as additional insured. What do I do?

Ask your agent or broker to issue it, and only once the endorsement is on the policy. A certificate summarizes the policy on the day it was issued and does not add coverage, so confirm the endorsement exists first, then have the certificate issued under the correct named insured.

What happens to open deposits and warranty work when I buy a fencing company?

They often land on you in practice, because customers who paid deposits expect finished fences and callbacks come with the name. The purchase agreement decides who pays, so ask your counsel. List open deposits, custom orders in production and warranty callbacks, and decide with your counsel who funds them.

References

Just bought a business? Get your insurance reviewed.

Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.

Request a review Check a contract

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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.

Contracts, Licenses and Bonds for a Fencing Company