Contractor Bonds Insurance

Get the right bond insurance at the right price. At PBIB, we can save you up to 40%!

Looking for cheap contractor bonds insurance for contractors?
Get your coverage here at Pascal Burke Insurance Brokerage


(877) 893-7629

What is Contractor Bonds?

A contractor bond is required in most states. The contractor’s bond must be issued by an insurance carrier admitted by the State where you are licensed. The insurance company that issues any surety bond will be referred to as the “surety company” or “bond company” as the contractor you are the Principal, the surety bond company as the Obligor, and the CSLB as the Obligee.

The surety company will provide the regulatory agency a guarantee (the surety bond) that vendors, customers, suppliers, and employees of a licensed contractor will receive payment for financial damages due to a violation of a Contractor License Law amounting to several thousands of dollars depending on your state (“penal sum” or “bond amount”).

If you are a general contractor or a roofing contractor, you may need to obtain a contractors license bond before you can start working on projects in your state. A contractors license bond is a type of surety bond that guarantees your compliance with the laws and regulations governing your profession. It also protects your clients from any damages or losses that may result from your work.

A contractors license bond for general contractors is not the same as insurance. It does not cover your own liabilities or expenses. Instead, it acts as a form of credit that allows you to bid on and perform contracts. If you fail to fulfill your obligations or violate the terms of your bond, your client or the state can file a claim against your bond. The surety company that issued your bond will then investigate the claim and pay for any valid damages up to the bond amount. You will then have to reimburse the surety for the payment.

A contractors license bond is an essential requirement for many general contractors and roofing contractors who want to work legally and professionally in their state. It demonstrates your credibility and trustworthiness to your clients and the state. It also protects your clients from any potential losses or damages caused by your work. If you need a contractors license bond for roofing contractors, contact us today and get a free quote.

When Do I Need a Bond?

  • License requirements of the state or county.
  • Performance and Payment bonds are contract requirements of the owner or prime contractor.

What Does a License Bond Cover?​

  • The license bond provides assurance to your customer that you will perform your contracted work and adhere to state or county guidelines.

License Bond

A license bond is used to obtain or maintain your contractor license. A license bond is required in most states, and is your guarantee that you won’t violate any state law regulations.

You can get a license bond as low as $70, but the price goes up depending on personal credit, license history and the classification of the contractor.

Unlicensed contractors do not carry contractor bonds and in result consumers do not receive protection from the bond insurance requirements. Every year the regulatory agencies receive thousands of complaints regarding unlicensed contractors, don’t be a part of that statistic!

Performance Bond

Also known as a contract bond, performance bonds are required by law for any public construction projects. Contractor performance bonds ensure you’ll follow through on your end of a contract and complete construction in the time and manner agreed upon.

These types of bonds are required for prequalifying a contractor and providing assurance that you are properly vetted to perform the work they wish to undertake. This also provides financial protection to the obligee should the contractor default on its contractual obligation, at the same time ensuring that the contract will be performed properly and that laborers and suppliers will be paid for their work and the materials provided.

This type of bond is for project-specific surety between a principal and an obligee. Contract bonds cost between 2.5% and 3% of the contract amount and this rate is based on the financial stability, experience, and proven reputation of the contractor as well as project details.

To qualify for this type of bond, contractors will need to provide information to the surety company to demonstrate their ability to complete the contract as expected. The information requested varies depending on the type of work that will be performed and the size of the contract.

The process of the contract bond goes as follows, letter of bondability, bid bond, performance/payment bond then project completion.

Bid Bond

Bid bonds keep the bidding process fair for everyone by guaranteeing that the successful bidder will enter the contract and provide the required contract bonds.

When you are in the bidding process of a project, there may be a listed requirement to include a bid bond with your submitted bid documents. This type of bond provides financial assurance that if you submit a bid, if awarded the contract, will enter into a formal contract with the owner and post a performance and payment bond if required.

Payment Bond

Once you have been awarded the contract (hooray!) the project owner (obligee) will include all the requirements they expect for performance (written within a contract) and or a payment bond. The performance bond is a surety providing a credit line guaranteeing the performance of work as specified by the contract. A payment bond guarantees payment to labor suppliers and material providers.

Payment bonds are a type of contract bond required by law for any work on public projects. Contractor payment bonds work to protect subcontractors, day laborers, and materials suppliers against non-payment.