Contractor License Bond

Contractor license bonds help construction and contractors secure work.

Contractor Bonds Insurance

Coverage provided through NEXT or one of our trusted insurance partners.

Learn more about Contractor License Bonds


What is a Contractor License Bond?

Contractor license bonds are often required for construction workers and other contractors to secure work with government agencies and property owners.

A contractor license bond helps provide recourse to customers if a contractor fails to fulfill a contract for a job. They’re useful because this aspect of the work is often not covered by insurance. Contractor license bonds guarantee that the contractor is in compliance with the laws, ordinances or regulations of their profession or business.

A contractor license bond is a type of surety bond. Governments, commercial projects or homeowners may require construction contractors to carry a contractor license bond.

NEXT is proud to partner with Liberty Mutual Surety to offer contractor license and permit bonds.

Contractor license bonds typically expire one year from their effective date unless otherwise required.

Are contractor license bonds insurance?

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 they are described in the contract. That could include accidents, injuries or other unfortunate failures. Think of the insurance/policyholder relationship as two sides of a circle.

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. 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.

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

Who needs a Contractor License Bond?

Construction contractors working for some government agencies, commercial property owners or homeowners are sometimes contractually obligated to carry a surety bond to work.

Local regulations and owners will dictate what bonding is required.

How much do Contractor License Bonds cost?

In some states bonds can start at around $100, but it depends on where you are, the term of the bond, the bond amount and other factors.

Enter your information into the online quote tool to see how much a bond will cost.

Your bond can be issued immediately after payment, along with a cover letter of special instructions and a power of attorney.

How do I get a Contractor License Bond for my project?

Commercial contractor license and permit bonds are issued online and you can have your bond in hand in minutes. Getting a quote is easy, and there are two ways to price and buy your bond in our quote tool:

1. For a fast quote: Under Quick Quote choose your state or US territory. Select the Bond Category menu. If there’s an option for a Contractor’s License, you can get a quote right away.

  • Select the city name and bond type you require.

  • Hit Next, then enter your trade.

  • The Get Quote button will show you the estimated cost of your bond in seconds.

2. To buy your bond right away: Under New Bond, select your state or US territory. If we offer contractor license bonds in your area, the city name and bond name will appear.

  • Click the Get Bond button.

  • Enter your name and email, the effective date of the bond, and your contractor’s trade. You’ll see the price quote immediately.

  • Select the principal type that most closely resembles your business, such as a sole proprietorship or an LLP.

  • Share who will sign the bond and where.

  • Process payment and your bond is issued on the spot.

What kind of insurance do I need for my construction business?

Contractor license bonds can help your construction business gain work, but they can’t protect your business from risk.

It's important to consider other business insurance options for construction to help you create your risk management plan, including:

General liability insurance that can help protect you from financial losses if anyone who’s not an employee gets hurt or damages someone else’s property and your business is at fault.

NEXT’s general liability coverage usually includes contractor’s errors and omissions insurance, which can help protect your business from losses after a professional mistake.

You might also need workers’ compensation insurance to protect you and your employees from financial losses related to workplace injuries.

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