If you are a contractor who has recently begun bidding jobs on their own, you may have some questions about license bonds. These bonds are needed in many instances when a contractor is placing a bid on a government project. Any government agency, either federal state or local municipality, could require a bond before a bid can even be presented.

This type of bond is basically an assurance that the contractor is licensed and will perform all of their work according to the standards required by law. If they fail to do so, the bond will protect the agency which hired the contractor from any lawsuits due to the quality of the work.

Bonds are a type of insurance and are provided by insurance agencies who specialize in this type of coverage. It is similar to any other insurance policy in that premiums will need to be paid according to the schedule established by the insurance company. Just as with any insurance policy, lack of payment will result in the cancellation of the bond and in this situation could also mean fines and penalties from any current clients.


Because of the time-sensitive nature of bidding for jobs, license bonds are typically available from an insurance company in a single day or less after they have been chosen. The cost of the bond will depend on the volume of the work the contractor will perform over the course of the year.

This amount will often need to be estimated, particularly if the company is newly established. It is important to provide as accurate an estimate as possible to avoid being over or under insured. If you are over insured you will be paying more money than necessary. Being under insured could cause you to lose contracts or to have your bond canceled. If after receiving the bond your workload increases more than expected, you can apply for additional coverage at that time.

Insurance companies that carry license bonds will typically also offer the other construction bonds people will need to bid on various types of projects. These can include bid bonds, performance bonds and much more. If you are uncertain about the coverage you need, learn more here, or just schedule a consultation with the agents learn more at Unitedsuretybonds.com. They can explain all of the bonds they carry, what type of coverage they provide and help you to choose exactly what you need to get your business protected.