Contractor License Bond

What is a contractor license bond?

It is a three-party agreement. You are the principal. The licensing board is the obligee, the party the bond protects. We arrange the surety company that stands behind the bond. If a homeowner or a customer suffers a loss because you violated the licensing law, such as abandoning a job, doing defective work you would not fix, or failing to pay for labor and materials, they can file a claim against the bond. If the claim is valid, the surety pays, up to the bond amount, and then looks to you to repay it.

 

That last part matters. A contractor license bond is not insurance for you. It is a guarantee to the public, backed by your promise to make the surety whole. It is a good thing to have anyway, because "licensed and bonded" is what customers look for, and in most states you cannot hold the license without it.

 

How much does a contractor license bond cost?

You do not pay the bond amount. You pay a premium, once a year, that is a percentage of the bond amount. Across the industry that percentage runs from about 1% to 5%, so a $25,000 bond costs somewhere between $250 and $1,250 a year. Where you fall in that range is mostly about your personal credit. We quote our best rate at a FICO score of 700 or above. Below that, the rate steps up, but the bond is still available in almost every case, and there is no collateral requirement on a license bond.

 

Bigger bonds, such as the $100,000 to $1,000,000 bonds some states accept in place of a financial statement, are underwritten on business financials as well as credit. For a full walk-through with worked examples, read how much a contractor license bond costs.

 

Does my state require a contractor license bond?

States fall into three groups, and it helps to know which one you are in before you apply.

 

Every licensee posts a bond. California, Oregon, Washington, Arizona, Nevada, New Mexico, Alaska, New Jersey home improvement contractors, and South Carolina residential builders all require a bond from every licensee, in an amount the board sets.

 

A bond is one way to meet a financial test. Georgia, Louisiana, North Carolina, South Carolina general contractors, Tennessee, Utah, Virginia and Wisconsin let you post a bond instead of proving net worth, working capital or liability insurance. Many contractors in these states never need the bond. Contractors who are new, growing fast, or coming off a rough year often do.

 

No state bond, but your city or county may want one. Texas, Colorado, Alabama, Mississippi, Nebraska, North Dakota, Connecticut, Maryland and Minnesota do not require a state-level contractor license bond. Several of them have local permit or license bonds instead, and a few have a bond for out-of-state contractors only (Iowa, Delaware, Wyoming). If a city clerk told you that you need a bond, you probably do, and we write those too.

 

The table below shows what we found on each licensing board's own site. Amounts change, so we recheck them, and the state page has the detail.

 

Contractor license bond requirements by state

State	Required?	Bond amount	Who requires it
Alabama	No state bond for general contractors; $10,000 bond for roofers	$10,000 (roofers); local bonds vary	Home Builders Licensure Board; cities and counties
Alaska	Yes, everyone	$25,000 general; $20,000 general with residential endorsement; $10,000 specialty; $5,000 handyman	Division of Corporations, Business and Professional Licensing
Arizona	Yes, everyone	$2,500 to $100,000 by license class and gross annual volume	Registrar of Contractors (ROC)
California	Yes, everyone	$25,000 (all classifications)	Contractors State License Board (CSLB)
Colorado	No state bond; city and county bonds	Varies by city (Denver, Colorado Springs and others)	Local building departments
Connecticut	No bond for home improvement or new home registration (Guaranty Fund instead); nonresident contractor bond for sales tax is separate	Nonresident contractor bond: 5% of the contract price on contracts of $250,000 or more	Department of Consumer Protection; Department of Revenue Services
Delaware	Nonresident contractors only	6% of contracts over $20,000	Division of Revenue
Florida	Financially responsible officer only; the old sub-660 credit bond is no longer in the rule	$100,000 (FRO bond)	DBPR, Construction Industry Licensing Board
Georgia	Residential Basic and Residential Light Commercial: bond or net worth. General contractors: net worth only	$25,000	State Licensing Board for Residential and General Contractors
Hawaii	When the board requires it as proof of financial integrity	Set by the board case by case	Contractors License Board (DCCA)
Iowa	Out-of-state contractors only	$25,000	Division of Labor, Contractor Registration
Louisiana	Only if you cannot show $10,000 net worth	$10,000 plus any negative net worth	State Licensing Board for Contractors (LSLBC)
Maryland	Only if you do not meet MHIC financial solvency guidelines (Guaranty Fund covers most licensees)	Set by MHIC; local county bonds vary	Maryland Home Improvement Commission
Minnesota	No bond for residential building contractors (Recovery Fund fee instead); trade licenses differ	$25,000 for mechanical contractors; none for residential builders	Department of Labor and Industry
Mississippi	No state bond; net worth shown by financial statement	Local bonds vary	State Board of Contractors
Nebraska	No state bond; registration only. City bonds in Omaha, Lincoln and others	Varies by city	Department of Labor; cities
Nevada	Yes, everyone	$1,000 to $500,000, set by the board per license; plus a $100,000 consumer protection bond for residential improvement contractors taking large down payments	Nevada State Contractors Board
New Jersey	Yes, all registered home improvement contractors (since 2024)	$10,000, $25,000 or $50,000 by contract size	Division of Consumer Affairs
New Mexico	Yes, everyone	$10,000 (all classifications)	Construction Industries Division
North Carolina	Only in place of working capital	$175,000 Limited; $500,000 Intermediate; $1,000,000 Unlimited	Licensing Board for General Contractors
North Dakota	No state bond	None (liability insurance instead)	Secretary of State
Oregon	Yes, everyone	$15,000 to $25,000 residential; $25,000 to $80,000 commercial, by endorsement	Construction Contractors Board (CCB)
South Carolina	Residential builders: yes, everyone. General and mechanical contractors: in place of a financial statement	$15,000 residential builder; $20,000 to $350,000 general; $7,000 to $300,000 mechanical, by license group	Residential Builders Commission; Contractor's Licensing Board
Tennessee	Home improvement: yes, everyone. Contractor license: in place of a financial statement (option added July 2026)	$10,000 home improvement; 50% of your monetary limit ($250,000 to $1,500,000) for the license bond	Board for Licensing Contractors
Texas	No state bond; city and county permit bonds	Varies by city	Local building departments
Utah	Only if you fail the financial responsibility test	$50,000 general; $25,000 R100; $15,000 specialty, or 30% of liabilities if greater	Division of Professional Licensing (DOPL)
Virginia	Class A and B, in place of net worth	$50,000	Board for Contractors (DPOR)
Washington	Yes, everyone	$30,000 general; $15,000 specialty	Department of Labor and Industries (L&I)
Wisconsin	Dwelling contractors: bond or $250,000 liability insurance	$25,000	Department of Safety and Professional Services
Wyoming	No state license bond; nonresident sales and use tax bond only	Percentage of contract value, set by the Department of Revenue	Department of Revenue

Amounts verified on each licensing authority's website as of September 2026. Your board's application is the final word.

 

Does the contractor license bond protect my business?

Not directly. The bond protects your customers and the licensing board. If a claim is paid, you owe the surety that money back. What the bond does for you is let you hold the license, and signal to homeowners and general contractors that you are accountable. If you want protection for your own business, that is general liability insurance, and many states require both.

 

How to get a contractor license bond

Tell us your state, license type and the bond amount on your application. We run a soft credit check, quote you the same day, and once the annual premium is paid we issue the bond and send it to you for filing with your board. Most contractor license bonds go out the day you apply. If your state ties the amount to your license class or revenue, we will confirm the number with you before we issue it.

 

Frequently asked questions

How much does a contractor license bond cost?

Generally 1% to 5% of the bond amount per year, with strong credit at the low end. A $25,000 California bond, for example, runs about $250 to $1,250 a year. We quote our best rate at FICO 700 and above.

Can I get a contractor license bond with bad credit?

In most cases, yes. Weaker credit means a higher premium, not a decline, and license bonds do not require collateral. Tax liens and open judgments are the items that cause the most trouble.

What does "licensed and bonded" mean?

Licensed means the state or city has approved you to do the work. Bonded means a surety bond is on file that will pay a customer's valid claim if you break the licensing rules. Insured is a third thing: liability insurance that protects you and your customers from accidents and property damage.

Do I need a separate bond for every state I work in?

Usually, yes. Each state, and sometimes each city, sets its own requirement and names itself as the protected party. A California bond does not satisfy Nevada.

What happens if a claim is filed against my bond?

The surety investigates. If the claim is valid, it pays the claimant up to the bond amount, and you are required to reimburse the surety. An unpaid claim can lead to license suspension, so respond to claims quickly and keep us in the loop.

Is the bond the same as a performance bond?

No. A license bond covers your license and stays in force year to year. Performance and payment bonds cover a single construction contract and are underwritten on that project. We write both, but they are separate products. See our construction bonds page for project bonds.

My state is not on the list. Can you still help?

Yes. We write license and permit bonds in all 50 states, including city and county contractor bonds. Call 800-333-7800 with the name of the agency asking for the bond and we will find the form.

How fast can I get the bond?

Same day in most cases. The application is one page and the credit check is a soft pull.