Contractor License Bonds
If you’ve been asked for a contractor license bond, start with where you work. Some states set one amount, some let a board decide, and some leave bonds to cities and counties. Ashton Agency can help you sort out what your license calls for and get a quote.
Questions about your bond? Call our East Coast team at (800) 451-4854 or our West Coast team at (800) 452-2663, or use the quote form below.
What Is a Contractor Bond
A contractor license bond is a financial guarantee that you will follow the licensing laws. Depending on the law and the bond form, an injured customer or the state can make a claim if you don’t. A license bond doesn’t necessarily guarantee every term of a customer’s contract. It is a condition of the license in the states that require it. It isn’t liability insurance, and it doesn’t pay for your own repairs or losses.
Three parties are involved: the business or individual required to obtain the bond (the principal), the surety company that issues it, and the government agency or other party requiring it (the obligee). Ashton helps arrange the bond but isn’t one of those three parties. If the surety pays a valid claim, the principal has to pay the surety back.
Who Needs One and What It Covers
Contractor bonds are not the same everywhere. Some states set one amount, some let a board decide, and some leave contractor bonds to cities and counties. Here is what each state requires at the state level.
Arkansas
The Contractors Licensing Board requires a $10,000 commercial contractor bond, payable to the State of Arkansas, before it releases a license (Ark. Code 17-25-404). It is continuous, with 60 days’ notice to the Board before it can be canceled, and a License and Permit Bond form isn’t accepted. Commercial licenses are required for work of $50,000 or more, with single-family residences excepted. An applicant can also post a separate bond in place of a CPA-reviewed financial statement. A residential roofing contractor registration calls for a $15,000 bond.
New Mexico
The Construction Industries Division requires a $10,000 bond from a surety authorized in New Mexico when you first license and each time you renew (14.6.3.8 NMAC). The bond covers the whole licensing period. Payment can go to cure code violations that you caused and didn’t correct. Claims must come within two years of the final inspection or certificate of occupancy, and the surety needs to give 30 days’ written notice before canceling.
Nevada
The Nevada State Contractors Board requires a surety bond or a cash deposit before it issues a license. The Board fixes the amount for each contractor, based on financial responsibility and the size of the operation. By statute that amount can run from $1,000 up to $500,000 (NRS 624.270). After five consecutive years licensed, the Board may relieve a contractor of the requirement. Residential pool and spa contractors have a separate consumer-protection bond, starting at $10,000.
Illinois
Illinois has no state general contractor license and no state general contractor bond. The state does license roofing contractors under the Roofing Industry Licensing Act, with a continuous $10,000 bond for a limited license (residential work, up to eight units) or $25,000 for an unlimited license. The bond runs to the State of Illinois. Illinois also requires a $20,000 plumbing contractor bond or letter of credit. General contractors are licensed by cities and counties, and many of them require their own bonds. Local bond requirements and amounts depend on the city or county and the type of work or license.
Florida
The state’s Construction Industry Licensing Board doesn’t set one flat contractor license bond. Ashton writes county-specific contractor bonds in Florida, and requirements vary by county. Counties and cities license some trades on their own terms. Separately, a business that designates a financially responsible officer (FRO) must post a $100,000 bond payable to the Board. An irrevocable letter of credit is accepted as an alternative. Applicants with a FICO score below 660 now complete a board-approved 14-hour financial responsibility course.
Texas
Texas has no statewide general contractor license and no statewide general contractor bond. Electrical contractors are licensed by the state’s Department of Licensing and Regulation, whose application asks for insurance and doesn’t mention a bond. Some cities and counties require their own bonds, and the requirement and amount depend on the city or county and the type of work or license.
Contractor bonds at the state level:
| State | Bond amount |
|---|---|
| Arkansas | $10,000 commercial, $15,000 residential roofing |
| Florida | County-specific, see above |
| Illinois | Roofing: $10,000 limited, $25,000 unlimited. Plumbing: $20,000. Local amounts vary. |
| Nevada | $1,000 to $500,000, set by the Board |
| New Mexico | $10,000 |
| Texas | No statewide general contractor bond |
Why Choose Ashton Agency
State rules sorted out
Contractor requirements vary by state and trade. You can talk through your license with an actual member of the Ashton team.
Choices and rates
We work with more than one carrier, so we can compare the bond options and rates for your license.
Trades and classes
Bond amounts can depend on your license class or trade, and we’ll help you confirm which one applies.
Sixty years of bonds
Ashton has been writing bonds since 1966.
Frequently Asked Questions
Does every contractor need a license bond?
No. Arkansas, New Mexico, and Nevada require one at the state level. Illinois requires one for roofing ($10,000 limited, $25,000 unlimited) and for plumbing contractors ($20,000 bond or letter of credit). Texas has no statewide general contractor bond, and Florida’s state rules don’t set a single flat amount. In Illinois, Texas, and Florida, local bond requirements and amounts depend on the city or county and the type of work or license, so check your local office too.
Why is the Nevada bond amount a range?
Nevada’s Contractors Board decides each contractor’s amount based on financial responsibility and the size of the operation, and it can raise or lower it at renewal or after a hearing. Ask the Board which amount applies to you.
If the bond is $10,000, do I pay $10,000?
No. The bond amount is the coverage the state sets. What you pay is a premium, quoted separately for your license.
Is a contractor license bond the same as insurance?
No. A bond guarantees your compliance with the licensing law and protects customers and the state. Insurance protects your business. Some licenses call for both.
Can I post cash instead of a surety bond?
Some states allow it. Arkansas accepts a cash bond, and Nevada accepts a cash deposit in place of the bond. The state’s licensing office decides what qualifies.
Request a Contractor Bond Quote
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