Cost
How much does a contractor bond cost in 2026?
“Contractor bond” can mean a license bond your state requires or a project bond a customer requires, and the two are priced very differently. This article covers what each type typically costs, the bond amounts in California and Washington, how being bonded differs from being insured, and how to pay less.
Typical contractor bond costs
You don’t pay the full bond amount. You pay a premium, which is a percentage of it. Insureon says surety bond premiums range from 1% to 15% of the bond amount, typically paid each year, and that applicants with strong credit usually pay between 1% and 3.5%. Most bonding companies also charge a minimum premium, which Insureon puts at around $100.
Small license bonds are cheap for most contractors. Insureon’s August 2026 data shows its contractor customers pay a median of $9 a month, or $112 a year, for surety bonds. Credit is what moves the price most: NFP, a large insurance broker, says rates for poor credit can reach 8% to 10% of the bond amount, or even 15%.
| Bond amount | Estimated annual cost |
|---|---|
| $5,000 | $25 to $500 |
| $10,000 | $50 to $1,000 |
| $50,000 | $250 to $5,000 |
| $100,000 | $500 to $10,000 |
What kind of bond a contractor needs
Most contractors meet one of two kinds of bond. A license bond is required by a state or local licensing agency and renews every year. A contract bond is required by a project owner for one specific job and, according to NFP, is usually charged once for the duration of that project.
- License bond: guarantees you will follow licensing law. Consumers or workers harmed by violations can claim against it.
- Bond of qualifying individual: an extra license bond some states require for the person who qualifies the license.
- Bid bond: guarantees you will sign the contract if you win the bid.
- Performance bond: guarantees you will finish the job as the contract requires.
- Payment bond: guarantees you will pay your subcontractors and suppliers.
Contractor bond amounts in California and Washington
California and Washington both set bond amounts by law, and both raised them recently. California’s Contractors State License Board raised its contractor bond to $25,000 on January 1, 2023. Washington’s Department of Labor and Industries raised its bonds on July 1, 2024. The cost column below is an illustration only, using the 1% to 3% range that NFP says strong-credit applicants often get.
Each state has its own filing rules. In California, the bond must come from a surety licensed through the California Department of Insurance, match the business name and license number exactly and reach the board within 90 days of its effective date. Washington also requires $250,000 of general liability insurance, or $200,000 public liability plus $50,000 property damage, with L&I listed as certificate holder. Its registration fee is $150.20.
| Bond | Who needs it | Bond amount | Illustrative yearly cost |
|---|---|---|---|
| California contractor bond | Every active license | $25,000 | $250 to $750 |
| California bond of qualifying individual | Licenses qualified by an RME, or an RMO owning under 10% | $25,000 | $250 to $750 |
| California LLC employee/worker bond | LLC licenses, on top of the contractor bond | $100,000 | Ask your surety |
| Washington general contractor bond | General contractors | $30,000 | $300 to $900 |
| Washington specialty contractor bond | Specialty contractors | $15,000 | $150 to $450 |
What performance and payment bonds cost
Project bonds are priced on the contract amount, not a fixed license amount. NFP says established contractors with strong financials might pay around 1% of the contract amount for a performance bond, while newer contractors or riskier projects might see rates of 2% or higher. As an illustration, a $400,000 job at those rates would mean a bond premium of roughly $4,000 to $8,000 or more, which you should build into your bid.
Public work is where these bonds are most often required. Under FAR 28.102-1, federal construction contracts over $150,000 require both performance and payment bonds, and contracts over $35,000 up to $150,000 require other forms of payment protection chosen by the contracting officer.
If a surety won’t bond you on standard terms, the SBA’s Surety Bond Guarantee Program backs bid, performance, payment and maintenance bonds issued by participating sureties on contracts up to $9 million, or up to $14 million on certain federal contracts.
Bonded and insured: what the difference means
A bond protects your customer, the state or your workers, not you. Insureon describes a surety bond as more like a line of credit than an insurance policy: if the surety pays a claim, you must pay it back. Fidelity bonds, which cover employee theft, are the exception.
Insurance protects your business. General liability pays for injuries and property damage you cause, and workers’ comp covers your employees. A bond does neither, which is why licensing agencies and customers often ask for both. Washington, for example, requires a bond and liability insurance to register, and California requires LLC licensees to carry at least $1 million of liability insurance on top of their bonds.
How to pay less for a contractor bond
The bond amount is set by your state or the contract, so savings come from your rate. A broker such as Florin can help you line up bond and insurance quotes together.
- Check your personal credit before you apply and fix errors. NFP says owners’ credit is usually the main pricing factor for bonds under $50,000.
- Keep business financial statements current. For project bonds, NFP says sureties look at financial statements, net worth and years in business.
- Buy only the bond amount your state or contract actually requires, and confirm the exact name and license number before it is issued.
- Renew on time. Washington L&I suspends registrations when requirements such as the bond are not met.
- Compare bond quotes from more than one surety or agent, especially if your credit is below average.
- Ask about the SBA guarantee program if you can’t get project bonds on standard terms.
Frequently asked questions
Do I need to be bonded as a contractor?
It depends on your state and your contracts. California and Washington require a bond to hold a license or registration, and federal construction contracts over $150,000 require performance and payment bonds. Check with your state licensing agency for your trade.
Can I get a contractor bond with bad credit?
Usually, yes, but at a higher rate. NFP says poor-credit rates can reach 8% to 10% of the bond amount, so a $25,000 bond might cost $2,000 or more a year.
Is a contractor bond a one-time payment?
License bonds are typically paid every year for as long as you hold the license. Performance and payment bonds are usually a one-time premium for the length of the project.
Does a contractor bond replace liability insurance?
No. A bond pays your customer or the state, and the surety expects you to repay it. General liability insurance is what pays for injuries and property damage your work causes.
Figures are third-party estimates and examples, not quotes. Coverage depends on the policy terms and underwriting, and rules vary by state.