Contractor Bond / Contract of Agreement

What Is A Contractor Bond?

If you want to become a licensed contractor it is mandatory to acquire a contractor license bond. Every state requires this. Without a license like this one you won’t be able to take a step further.

Most contractors don’t even know the proper meaning of bonded contractor.

That’s is why in this article we are going to explain in more details about what really is a contractor bond.

The definition of contractor bond

When we are talking about a contractor bond we are talking about a way of legally binding. What this means is that a contract like this one will protect the clients that one contractor has. If the contractor doesn’t fulfill the requirement they needed to fulfill, then the clients are able to file for financial compensation.

Many people mix them up with construction bonds. Those are required only for any public project that is available.

Further below we are going to go break it down and see how these types of bonds really work.

All about the functionality of contractor bond

Once the contractor acquires a license bond, they can require a bond with the client. Not only do they have to require a bond with the client, but also with a surety company.

Most people refer to the client of the agreement as an obligee. The surety company is the one that will guarantee the client or the obligee that the job will be done. That means that the contractor has to be financially capable of paying any bond.

And if they don’t do what they are supposed to do, then the client is allowed to make any claims against the contractor. And it all falls down on them to pay in the end. So, no matter what the outcome is at the end, the client is safe and protected by the bond.

Is there a difference between being bonded and insured?

Many times contractor bonds and liability insurance are to be confused by so many contractors. It is often thought that these two are quite similar, when in fact they are quite the opposite.

When we are talking about a license bond, we are talking about the benefits of the clients and employees. This is only in the case where they are financially damaged. This situation happens only when the contractors doesn’t do their end of the bargain.

So as much as we like to think that a bond like this is to protect the contractor, it is in fact a protection of the clients and employees.

On the other hand, a liability insurance is more on the contractors’ side. This one covers and protects them. But, not the way you may think. This type of insurance protects the employees in case there is an injury that happens on the job.

These two offer protection, but in situations that are so different from another. There so much to learn about this particular topic. If you want to know more about this, follow for more information.

The responsibilities of a contractor

If you are in this position, then you have to be aware that it comes with many responsibilities.

First things that is probably one of the main things that one contractor should take care of is to take any necessary precautions when it comes to the employees’ safety. Like we mentioned before, they have a liability insurance just in case something does happen on the job.

No matter where the work site is, it is very important to have all the equipment needed there. This equipment needs to be properly maintained. This all brings us back to the safety of the employees.

While we are on this topic, there is always someone who is in charge of keeping track of what is going on, on the job.

There are plenty of things to consider in this line of work. And it comes with its risks and advantages.


This is a type of job that has a lot of money involved in it. this is why there are bonds and insurances involved. It can be risky, but at the same time when all goes right it is all worth it in the

What Is A Contractor Bond?

You May Also Like

Leave a Reply

Your email address will not be published. Required fields are marked *