General Contractor Surety Bonds

When a contractor is licensed and meets bond requirements, it means that they meet some legal and financial standards to help protect their clients. People who hire construction trades often want licensed and bonded workers.

Contractor license bonds guarantee against unfinished work or failure to meet contract terms and ensure that work is done in compliance with the laws and regulations of their profession.

Licensed and bonded go hand in hand, but they’re not the same thing:

Licensed contractor

A licensed contractor has met the requirements established by the appropriate state or local licensing authority to legally perform certain types of work. Generally, a licensed contractor has passed an accreditation exam, met a number of required hours and is legally permitted to do their job.

Bonded contractor

A bonded contractor has the financial backing to protect their clients if they don’t do the work properly. They have bought a contractors license bond, a type of surety bond, to help cover losses from things like unfinished work projects, property damage or a failure to meet contractual obligations.

Licensing and contractor bonding requirements vary by location and trade; check with your state or local licensing authority to learn what you need. Contractor license bonds typically expire one year from their effective date, so be sure to keep them current.

In some circumstances, yes. Contractor license bond requirements vary by state, city, type of contractor and license. For example, in California, you can get license information from the California Contractors State License Board (CSLB). Your state or local licensing authority can tell you whether you need a contractors bond, the required bond amount and other contractor bond requirements.

If a contractor bonding is required, you'll typically need to keep the bond active to maintain your contractor license each year.

Contractor surety bonds are a broad category of bonds for the construction industry. They could guarantee that a contractor will complete a project according to the contract, pay subcontractors and suppliers or meet other project obligations.

A contractor license bond is a type of surety bond that may be required for a contractor to get or maintain a license. It helps guarantee that the contractor will follow applicable licensing laws and regulations.

Bonds are not insurance, but it’s easy to confuse the two.

Insurance is a two-party agreement, meaning that the insurance company agrees to pay for losses as described in the policy contract. That could include accidents, injuries or other unfortunate events. Think of the insurance/policyholder relationship as two sides of a circle.

Contractor license bonds, also called construction bonds or contract bonds, are a three-sided agreement, and this relationship looks more like a triangle.

One party is the surety, and that can often be the role of an insurance company or bonding company. They guarantee the work or obligations of a second party, called the principal (usually a construction contractor) to a third party — say, a city or property owner — known as the obligee.

Contractor bonds are a way to help ensure that contractors fulfill their requirements. And if they don’t, the bonds cover failings or shortcomings in meeting those obligations.

ERGO NEXT doesn’t issue contractor bonds directly. We partner with Liberty Mutual Surety to help contractors buy bonds.

You can buy a contractors bond online directly through Liberty Mutual Surety.

Choose your location and the type of contractor bond you need. If a bond is available for your location and trade, you can get a free, no-obligation surety bond quote.

We don’t sell contractor bonds directly, but we partner with a trusted surety company to provide this service.