If you’re a business owner, you’re probably always looking for ways to save money. One way you might be considering is using a contractor instead of hiring an employee. But before you do, you should be aware of the difference between contractor bonding and insurance. Here’s a comprehensive guide to help you understand the two.

What Is Contractor Bonding?

A contractor bond is a type of surety bond. It’s a three-party agreement between the contractor, the project owner, and the surety company. The surety company provides a financial guarantee to the project owner that the contractor will complete the work as specified in the contract.

If the contractor fails to complete the work, the project owner can make a claim against the bond. The surety company will then investigate the claim and, if it finds that the contractor is at fault, will pay the project owner up to the amount of the bond. The contractor will then be responsible for reimbursing the surety company for any money it pays out.

What Is Contractor Insurance?

Contractor insurance is a type of insurance that protects the contractor from financial loss if they are found to be at fault for damages or injuries that occur during the course of their work. It can also provide protection for the contractor’s employees.

There are several different types of contractor insurance, including general liability insurance, workers’ compensation insurance, and commercial auto insurance. General liability insurance covers the contractor for damages or injuries that occur to third parties, while workers’ compensation insurance covers the contractor’s employees for work-related injuries or illnesses. Commercial auto insurance covers the contractor’s vehicles used for business purposes.

Which One Should You Use?

There is no one-size-fits-all answer to this question. The type of protection you need will depend on the type of work you do and the risks involved. For example, if you’re a general contractor, you’ll need general liability insurance to protect you from third-party claims. But if you’re a roofing contractor, you’ll need workers’ compensation insurance to protect your employees from injuries.

It’s also important to remember that insurance and bonding are two different things. Insurance protects you from financial loss, while bonding protects the project owner from financial loss. So, if you’re bidding on a project that requires bonding, you’ll need to purchase a bond from a bonding company.


There are several key differences between contractor bonding and insurance. Contractor bonding is typically required by the state in order for a contractor to obtain their license, while insurance is not. Insurance typically covers claims made against a contractor for things like property damage or personal injury, while bonding generally covers claims made for things like failure to complete a project or failure to pay for materials. 

Both insurance and bonding can provide financial protection for a contractor, but they serve different purposes and cover different types of risks. It’s important to understand the difference between the two to make sure you have the right coverage for your business.

Pascal Burke Insurance Brokerage Inc. are specialists in an array of policies that cover not only general cases but also specialty contractors. Workplace injuries happen more frequently than you would think. You won’t have to worry about breaking the bank with our great rates! If you want to get business insurance for excavation contractors, we’ve got you covered! For a hassle-free transaction about your insurance policy, you can go to our website pbibins.com or call us at (877) 893 7629.