(1) Every contractor shall maintain a bond issued by a surety company licensed to do business in this state. The principal sum of the bond shall at all times be $25,000.
(2) The bond required by this section shall be in favor of the state for the benefit of any member who suffers loss of prepayments made pursuant to a contract entered into after July 1, 1976, due to insolvency of the contractor or the cessation of business by the plan. A copy of the bond shall be filed with the department. Any person claiming against the bond may maintain an action at law against the contractor and the surety.