What does it mean when a contractor is bonded?

Selecting the appropriate contractor for your home renovation project is a crucial aspect of achieving a successful remodel, as your home is likely to be the most significant investment you will make during your lifetime. Hence, all prior decisions have to be made with utmost care. Choosing the right contractor should be right up your list.

man and woman in hard hats discussing in a construction/remodel site

A contractor who is bonded possesses a surety bond, which functions as an insurance policy safeguarding the homeowner. This bond provides a specified amount of liability insurance, and in the event that the contractor is unable to complete the job as specified in the contract, the bond is utilized to compensate the homeowner. Consulting with an attorney can help you determine the amount of protection you will receive when employing a bonded contractor. If your project is of a considerable magnitude, such as adding a sizable addition to your home, it is advisable to ensure that the contractor has obtained a bond that is of sufficient size to account for potential issues.

What is a Contractor Bond?

If a contractor claims to be bonded, this signifies that they possess either a fidelity bond, a surety bond, or both.

It is crucial for property owners to have confidence in the contractors they hire for their projects since a negative experience with a contractor can lead to substantial financial losses, property damage, and wasted time. While most individuals have been advised to exclusively work with licensed, bonded, and insured contractors, the term “bonded” may not be as familiar to some. Therefore, it is beneficial to take the time to investigate what a bonded contractor is and why it is essential to have a contractor who is bonded.

A bonded contractor is a contractor whose responsibilities are secured by a contractor bond. For a better grasp, it’s essential to examine the meanings of each term:


A contractor refers to any commercial entity that provides professional construction and building services. There are various types of contractors, such as general contractors who are responsible for the primary contract of a project, and specialty contractors who provide specialized services like plumbing or electrical work.

Contractor Bond

This is a surety bond that guarantees a contractor’s fulfillment of their contractual and ethical duties to their clients. If the contractor breaches the terms of their bond, a client can submit a claim against the bond for compensation. Contractor bonds are frequently required by local government authorities, and the language in the bond’s legal documentation is structured to ensure compliance with relevant state laws and regulations.

Surety Bond

A surety bond is a contract between three parties that provides a financial assurance for one party’s obligations. When it comes to contractor bonds, the bonded party is the contractor.

Now we see why selecting a bonded contractor for your projects is so critical. A contractor’s surety bond safeguards their clients and ensures that contractors are held financially accountable. As a result, choosing a bonded contractor is an essential step in guaranteeing the success and protection of your construction project.

a man smiling while on the phone, next to a table with blueprints and hard hat

How to Check for Contractor Bond

To determine if a contractor has a surety bond, the simplest way is to just ask the contractor to furnish a copy of their bond certificate and license information. If the contractor is unwilling or unable to provide evidence of their bond, that’s a significant warning sign that should not be disregarded.

To authenticate the contractor’s bond details, you must reach out to the surety listed on the licensing certificate and inform them that you want to confirm the contractor’s bond coverage. In some places, you can confirm a contractor’s bond by contacting the state or city licensing authority that granted the contractor’s license. If you are unable to verify the validity of a contractor’s bond, it is yet another indication of trouble. If you collaborate with a contractor who lacks a surety bond, your options for holding them responsible later may be severely limited.

It would also be great if you can visit or view previous project sites done by the contractor and get references on their work from previous clients.

Advantages of a Bonded Contractor

Hiring a properly licensed, bonded, and insured contractor or design-build remodeling firm offers many advantages and important benefits. One of the main advantages is that hiring an unlicensed contractor can be a significant risk. An unlicensed contractor may not only lack the necessary license, but there is also a high likelihood that they are not obtaining the proper permits for their jobs and avoiding necessary inspections. This can lead to serious consequences such as unsafe work practices, inadequate or substandard work, and legal or financial liabilities for the property owner. 

Choosing to work with an unlicensed contractor not only increases the likelihood of poor quality work, but also means giving up any warranty claims. While most states require licensed contractors to provide implied warranties for their workmanship, these warranties only apply to contractors who are properly licensed and up-to-date.

In contrast, hiring a licensed contractor who is also bonded and insured provides peace of mind that the contractor has met the required qualifications, standards, and regulations, and is capable of completing the project to industry standards while providing protection to the property owner.

In the event that an unlicensed and uninsured contractor or any of their workers get injured while working on your property, you may become responsible for the damages. This is because licensed contractors are mandated to have worker’s compensation insurance as part of their licensing requirements, which provides protection for injuries sustained on the job. On the other hand, an unlicensed contractor may not have this coverage or any other form of protection. As a result, if a contractor or one of their crew members gets injured while on your property, you may be held legally responsible and may have to pay for damages.

two men shaking hands as if closing a deal, a woman smiling in the background


A construction contract company that holds a surety bond has greater credibility as obtaining a bond signifies the company’s professional stability. This is because surety bonds are only granted to contractors who have a proven track record of ethical and responsible business practices, financial stability, and technical competence. Therefore, when a contractor holds a surety bond, it provides a level of assurance to clients that the contractor has been vetted and is capable of completing the project according to the agreed-upon terms.