Cautious optimism is necessary when approaching any project with a contractor. You want to dream big and hope for the best, but always be prepared in case something goes wrong, or the project ends up being more expensive than you thought.

That being sad, one of the best steps you can take to protect yourself as a homeowner is to make sure your trades worker is bonded. If it doesn’t come up when you’re talking to them about their insurance, here’s an explanation of what it means to be “bonded.”

What is a bond?

A license bond is a contract made between three parties: the contractor, the state licensing agency that issues the bond, and the insurance company that funds the bond. They are essentially agreements that accompany each contractor, stating that they will always complete a job to the specifications that are laid out in a contract. If not, then they will always be held responsible for the cost.

Bonds are designed to protect the homeowner in case the contractor leaves shoddy workmanship, or there are damages that come up after the project that was completed. If, for example, the wiring that a contractor put in leads to a fire two weeks later, then a bond will cover the cost of repairing that for the homeowner.

License bonds can also be referred to as contractor license performance and payment bonds, or construction contractor bonds.

Bonds show that you’re working with the right contractor.

Contractors will often obtain a license bond after obtaining their license from the state licensing board. This means they have gone through extensive years of training which includes passing a test before receiving their license.

Even though not all states require licensed contractors to be bonded, it still shows that they are more reliable than those without a bond. In essence, bonds demonstrate that a contractor is willing to work out mistakes with their customers, and be held accountable for their actions. In a business where issues often come up, that assurance is vital for a homeowner.

Bonds are usually required for licensed contractors.

As we mentioned, most states require a licensed contractor to be bonded. In some cases, however, the laws may vary between counties in the state, or a bond might not be required at all, such as in Maine or Kentucky.

You can find that information by contracting your local state licensing board.

Hunter Insurance Services also compiled this helpful list, which details the names and laws for licensing bonds given by each state:


Bond requirements, by state (src: Hunter Insurance Services

|State |Bond Requirement | | ---- | -------------------| | Alabama | Contractor License Bond | | Alaska | Construction Contractor Bond aka Contractor License bond | | Arizona | Contractor License Bond | Arkansas | Contractor License Bond | California | Contractor Bond aka Contractor License Bond | Colorado | Contractor License Performance & Payment Bond | Connecticut | May be required locally | Delaware | Contractor License Performance & Payment Bond | Florida | Construction License Bond aka Contractor License Bond | Georgia | Contractor License Performance & Payment Bond | Hawaii | Contractor License Performance & Payment Bond | Idaho | May be required - trade specific | Illinois | General contractor, roofers state bond, some local bonds required | Indiana | May be required locally | Iowa | Contractor License Performance & Payment Bond | Kansas | May be required locally | Kentucky | May not be required | Louisiana | Contractor License Performance & Payment Bond | Maine | May not be required | Maryland | Contractor License Performance & Payment Bond - Home Improvement | Massachusetts | Contractor License Performance & Payment | Michigan | Contractor License Performance & Payment - Residential | Minnesota | Contractor License Peformance & Payment | Mississippi | May be required locally | Missouri | Contractor License Performance & Payment | Montana | May be required locally | Nebraska | May not be required | Nevada | Contractor License Performance & Payment | New Hampshire | May not be required | New Jersey | May be required locally | New Mexico | Contractor License Performance & Payment | New York | May be required locally | North Carolina | Contractor License Performance & Payment | North Dakota | Contractor License Bond | Ohio | May be required locally | Oklahoma | Contractor License Performance & Payment | Oregon | Contractor License Performance & Payment | Pennsylvania | May be required locally | Rhode Island | May not be required | South Carolina | Contractor License Bond | South Dakota | May not be required | Tennessee | Contractor License Performance & Payment - Home Improvement | Texas | Contractor License Performance & Payment | Utah | Contractor License Performance & Payment | Vermont | May not be required | Virginia | May be required locally | Washington | May be required - trade specific | West Virginia | May not be required | Wisconsin | May be required - trade specific | Wyoming | May be required locally


Remember - bonds are meant to help you as the homeowner. If you want to avoid any messy situations, then ask your contractor upfront if they are bonded.