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Insurance glossary · Bonds

license and permit bond.

Also called Contractor license bond.

The short answer

A license and permit bond is a guarantee a state or city requires before it licenses you, promising you’ll follow the rules that come with the license.

Nick McClish, Managing Partner, Riza Risk (licensed insurance agency) · Updated October 1, 2026

What does a contractor license bond protect?

The public and the people you work for. If you break the licensing law, for example by abandoning a job, doing work that violates code or not paying for materials, a harmed customer or the state can make a claim on the bond, up to its amount.

Who requires a license or permit bond?

State licensing boards, for some contractor licenses and trades, and cities and counties, for local licenses, registrations and permits like work in the public right-of-way. Some states require none, and some set the amount by license type or business volume.

How much does a license bond cost?

Usually a small percentage of the bond amount each year, set by the surety based mostly on the owner’s credit and the bond type. Because the bond amounts are set by law, the cost is often modest compared with other insurance.

Is a license bond insurance for my business?

No. It protects others, not you. If the surety pays a claim, it will look to you to repay it under the indemnity agreement you sign when the bond is issued.

Is a license bond the same as general liability?

No. General liability covers your legal liability for injury and property damage you cause. A license bond guarantees you’ll follow licensing law and pays harmed parties if you don’t. Many licenses require both.

What happens if my license bond lapses?

The surety notifies the licensing authority, and your license can be suspended until a new bond is filed. Work done while unlicensed can carry penalties and make contracts harder to enforce.

Do I need a separate bond for each city?

Often, yes. Many cities and counties require their own license or permit bonds, and right-of-way or street-use permits commonly need a bond for each jurisdiction. A state license bond doesn’t usually satisfy a city’s requirement.

Do license bonds work differently by state?

A lot. Some states require a bond for every contractor license, some only for certain trades or residential work, some leave it to cities, and some use a recovery fund instead. The notes below cover Riza’s licensed states in detail and every other state in a line.

in the states where Riza is licensed.

Riza is a licensed insurance agency in New York, Colorado, Texas, Florida, Massachusetts, Arizona, Nevada, North Carolina, New Jersey and Georgia. Notes below cite the law they come from. Detailed write-ups cover Arizona, Nevada, Texas, North Carolina and New York. One-line notes for other licensed states appear with them when this term has one.

  • ArizonaArizona requires a license bond for every contractor license from the Registrar of Contractors. The amount depends on whether the license is residential or commercial, general or specialty, and on expected annual volume, from about $1,000 for small residential specialty contractors to $100,000 for the largest commercial general contractors. Homeowners may also have access to a separate residential recovery fund.A.R.S. § 32-1152contractors in Arizona →
  • NevadaNevada requires every licensed contractor to post a bond or cash deposit with the State Contractors Board, which sets each amount between $1,000 and $500,000 based on the contractor’s finances, record and size. Residential contractors also pay into a recovery fund that can compensate homeowners for a contractor’s violations.NRS ch. 624 (624.270) · NAC ch. 624contractors in Nevada →
  • TexasTexas has no statewide general contractor license and no statewide license bond. State trade licenses for electrical, air conditioning and plumbing work require liability insurance instead, and bonds are set by cities, often for local registration or permits for work in the public right-of-way.16 Tex. Admin. Code § 75.40contractors in Texas →
  • North CarolinaNorth Carolina requires a general contractor license for projects of $40,000 or more but no blanket license bond. Applicants prove financial strength through working capital or net worth scaled to their license limit, or post a bond in its place, with the bond amount rising with the license limit.21 NCAC 12A .0204 · N.C.G.S. ch. 87contractors in North Carolina →
  • New YorkNew York has no statewide contractor license or license bond, so licensing is local. In New York City, home improvement contractors either pay into the city’s trust fund or file a $20,000 bond, and several counties license home improvement contractors under their own rules.NYC DCWP, home improvement contractor licensecontractors in New York →
  • ColoradoColorado has no statewide general contractor license or license bond, and cities and counties such as Denver license contractors and set any bond requirements locally.[secondary] Colorado contractor license overview
  • FloridaFlorida licenses contractors through the Construction Industry Licensing Board, which requires liability insurance and proof of financial responsibility rather than a standard license bond.Rule 61G4-15.003 Public Liability Insurance · DBPR CILB 5-A application
  • GeorgiaGeorgia licenses residential and general contractors through a state board with no mandatory license bond, though applicants must show financial responsibility and a bond is reportedly one way to do it.O.C.G.A. 43-41 (Georgia SOS)
  • MassachusettsMassachusetts licenses construction supervisors and registers home improvement contractors without a license bond, and registrants make a one-time guaranty fund payment of $100 to $500.Mass.gov - HIC registration and renewal
  • New JerseyNew Jersey requires home improvement contractors to register with the Division of Consumer Affairs and carry $500,000 per occurrence in liability insurance, but it doesn’t require a license bond.NJ DCA notice re: HIC/HEC registration requirements

every other state.

How it works everywhere else, with the rule each line comes from. Riza is not licensed in these states.

by trade.

  • General contractorsState and local license bonds are often the first bond a contractor needs, before any project bonds.
  • PlumbingPlumbing licenses and city registrations frequently require a bond, sometimes for each city you work in.
  • ElectricalElectrical contractor licenses and local registrations commonly carry their own bond requirements.
  • HVACMechanical and HVAC licenses in many places require a bond along with proof of insurance.
  • Landscaping and property vendorsWork in public right-of-way, like sidewalks and driveways, often needs a city permit bond.

where you’ll see it.

  • License applicationsA required surety bond form, filed with the licensing board.
  • City permitsRight-of-way, excavation or street-use permits that require a bond before work starts.
  • Renewal noticesReminders from the surety or board to keep the bond in force with the license.

keep the license and the bond in step.

Riza places license and permit bonds for each state and city you work in, tracks their renewal dates alongside your license, and keeps the forms the licensing board needs on file.

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Coverage it touches: Surety bonds