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MMBONDING
Licensing

What Does a Contractor License Bond Cover?

The $25,000 contractor license bond protects consumers, your employees, and the public, not you. Here is what a valid claim can cover, and what it cannot.

Illustration for the guide: What Does a Contractor License Bond Cover?

Who the bond protects

The most common misread of the contractor license bond is assuming it protects the contractor. It does not. The $25,000 bond, required under BPC §7071.6, protects consumers, your employees, and the public from harm caused by your work.

You carry it as a condition of your license. The people it pays out to are the ones you serve, not you.

What a valid claim looks like

  • Violations of contractor law. Willful or fraudulent breaches of the rules that govern licensed work.
  • Unpaid employee wages. Failure to pay wages your employees earned on the job.
  • Damages from a code violation. Losses a consumer suffers because your work violated building code.

What it does not cover

The bond does not cover your own losses. Damaged tools, an injured crew member, a lawsuit against your business: that is what insurance is for, and it is a separate product. See bonding vs insurance for the full split.

And remember the reimbursement rule: if the surety pays a valid claim, you pay the surety back. The bond backstops the public, not your wallet. The full contractor license bond page covers how to get and keep one.

Questions

FAQs

Reviewed by Michael Melshenker, CEO. Updated June 2026.

Does the bond protect me?
No. The contractor license bond protects consumers, your employees, and the public. It is not insurance for your own losses. If you want protection for your business, that is general liability and other coverage.
What can a valid claim cover?
A valid claim under BPC §7071.6 can cover willful or fraudulent violations of contractor law, failure to pay employee wages, and damages a consumer suffers from a code violation, up to the $25,000 bond amount.
If the surety pays a claim, do I owe anything?
Yes. A surety bond is not insurance. If the surety pays a valid claim, you reimburse it in full. That is why keeping your record clean protects your money, not just your license.