The Definitive Guide to General Contractor Bonds
Exhaustive coverage of contractor bonding requirements across all 50 states plus DC, federal Miller Act requirements, bond types, costs, claims processes, and industry practices
All information verified through official .gov sources as of November 2025
Need a Contractor Bond?
Fast approval for license, performance, and payment bonds. Licensed in all 50 states. Treasury-certified carriers.
Contractor bonds protect billions in construction work annually, yet requirements vary dramatically by state and bond type. As of November 2025, only 11 states require mandatory license bonds for all general contractors, while 8 states mandate bonds on all public projects regardless of value, and many states have no statewide requirements at all.
Recent legislative changes from 2020-2025 show an accelerating trend: California increased bonds 67% to $25,000 in 2023, Washington raised requirements 150% to $30,000 in 2024, and New Jersey implemented an entirely new tiered system ranging from $10,000 to $50,000 in 2025. Understanding these requirements is critical—contractors working without proper bonding face misdemeanor charges, license suspension, and inability to collect payment for completed work. Whether you need general contractor bonds, or specialized trade requirements like electrical contractor bonds, our guides provide comprehensive coverage. See also state-by-state contractor license bonds.
Recent Legislative Changes:
- Washington (2024): $12K → $30K general (150% increase)
- California (2023): $15K → $25K (67% increase)
- New Jersey (2025): New $10K-$50K tiered system
- Federal Miller Act (2023): Thresholds locked permanently at $150K
Key Coverage Areas:
- 50 states + DC license bond requirements
- Federal Miller Act & state Little Miller Acts
- 7 distinct bond types (license, performance, payment, bid, etc.)
- Bond costs: 0.5-10% depending on credit and bond type
Researching contractor license bonds across all 51 jurisdictions reveals no standardization. The bonding landscape falls into distinct categories: states with mandatory universal requirements, states with conditional alternatives, states requiring bonds only for non-residents or specialty trades, and states with no state-level requirements.
States Requiring Mandatory License Bonds
These states represent the minority with universal bonding requirements for all or most general contractors:
California
Amount: $25,000 (all 44 classifications)
Recent Change: Increased from $15,000 in 2023 (67% increase)
Rationale: 48.9% of complaints involved contracts over $15,000
Washington
Amount: $30,000 general, $15,000 specialty
Recent Change: Increased July 1, 2024 (150% increase)
First increase in: 22 years
Oregon
Amount: $15,000-$80,000 by endorsement
System: Complex endorsement-based (9 residential, 5 commercial types)
Recent Change: Increased $5,000 across all endorsements (2024)
Arizona
Amount: $2,500-$100,000
System: Volume-based on annual gross receipts and classification
Additional: Residential Recovery Fund OR $200,000 bond
Nevada
Amount: $1,000-$500,000
System: Individually determined by State Contractors Board
Factors: License type, monetary limit, financial responsibility, experience
Alaska
Amount: $25,000 general, $10,000 specialty, $5,000 handyman
System: Three-tier based on contractor classification
New Mexico
Amount: $10,000 (all licensed contractors)
System: Flat amount, simplest structure
New Jersey
Amount: $10,000/$25,000/$50,000 tiered
Effective: 2025 (existing registrations expire March 31, 2025)
System: Based on contract size and yearly totals
Conditional Bond States (Financial Statement Alternatives)
Virginia
Choice: $50,000 bond OR net worth demonstration
Net Worth: $45,000 (Class A) or $15,000 (Class B)
Note: CPA-prepared financial statements required for net worth option
South Carolina
Amount: $20,000-$350,000 by license group
2023 Change: Reduced from 2x to 1x net worth requirement
Alternative: Working capital demonstration
Georgia
Choice: $25,000 bond OR $25,000 net worth proof
System: Either-or requirement
North Carolina
Bond Option: $175K/$500K/$1M by classification
Alternatives: Working capital or net worth requirements
Reality: Most use financial statements vs bonds
Louisiana
Requirement: $10,000 minimum net worth
Bond Option: $10,000 + negative net worth (if can't show net worth)
Note: Bond is alternative, not universal requirement
Tennessee
Conditional: Only when fail financial responsibility standards
2024 Change: Modified financial statement requirements (Public Chapter 664)
Utah
Amount: $15,000-$50,000 by classification
When Required: Only when Division determines financial irresponsibility
Triggers: Delinquent payments, bankruptcy, judgments, negative net worth
Florida
Credit-Based: Eliminated for credit ≥660
If Credit <660: $10,000-$20,000 bonds required
Reduction Option: 14-hour financial responsibility course
Complete State-by-State Summary
| State | Bond Amount | Type |
|---|---|---|
| Alabama | Variable | Conditional |
| Alaska | $25K general | Mandatory |
| Arizona | $2.5K-$100K | Mandatory |
| Arkansas | $10K | Commercial only |
| California | $25K | Mandatory |
| Colorado | None | Local only |
| Connecticut | None | No state requirement |
| Delaware | 6% of contract | Non-residents only |
| DC | $25K | Home improvement |
| Florida | $10K-$20K | Credit <660 |
| Georgia | $25K | Or net worth |
| Hawaii | $5K min | Discretionary |
| Idaho | None | No state requirement |
| Illinois | None | No state requirement |
| Indiana | None | No state requirement |
| Iowa | $25K | Out-of-state only |
| Kansas | None | Residents exempt |
| Kentucky | None | No state requirement |
| Louisiana | $10K+ | If no net worth |
| Maine | None | No state requirement |
| Maryland | $30K-$100K | Conditional |
| Massachusetts | None | Residents exempt |
| Michigan | None | No state requirement |
| Minnesota | None | No state requirement |
| Mississippi | None | No state requirement |
| Missouri | None | No state requirement |
| Montana | None | No licensing system |
| Nebraska | None | No state requirement |
| Nevada | $1K-$500K | Mandatory |
| New Hampshire | None | No state requirement |
| New Jersey | $10K-$50K | Tiered (2025) |
| New Mexico | $10K | Mandatory |
| New York | None | No state requirement |
| North Carolina | $175K-$1M | Or working capital |
| North Dakota | None | No state requirement |
| Ohio | None | No state requirement |
| Oklahoma | None | General exempt |
| Oregon | $15K-$80K | Mandatory |
| Pennsylvania | None | No state requirement |
| Rhode Island | $20K | Underground utility only |
| South Carolina | $20K-$350K | Or financial statements |
| South Dakota | None | No state requirement |
| Tennessee | Conditional | When financially deficient |
| Texas | None | Local only |
| Utah | $15K-$50K | When irresponsible |
| Vermont | None | No state requirement |
| Virginia | $50K | Or net worth |
| Washington | $30K general | Mandatory |
| West Virginia | Wage formula | 4 weeks + 15% |
| Wisconsin | None | General exempt |
| Wyoming | None | No state licensing |
Miller Act of 1935 (40 U.S.C. §§ 3131-3134)
Federal Threshold: $150,000 (permanently locked in 2023 by NDAA Section 861)
Requirements: Performance bond + Payment bond, both at 100% of contract value (often purchased together as combined performance and payment bonds)
$35,000-$150,000: Contracting officers must select 2+ alternative payment protections
Alternatives: Payment bonds, irrevocable letters of credit, tripartite escrow, certificates of deposit
Miller Act Protection Structure
Performance Bond Protects:
- • Federal government and contracting agencies
- • Guarantees project completion per specifications
- • Covers costs to complete with replacement contractors
- • Protects against delay damages and defective work
Payment Bond Protects:
- • Subcontractors, suppliers, and laborers
- • Replaces mechanics' liens (can't attach to federal property)
- • First-tier: No notice required
- • Second-tier: 90-day notice requirement
Critical Miller Act Deadlines
Notice (Second-Tier Only): Written notice to prime contractor within 90 days of last furnishing labor/materials
Waiting Period: Cannot file suit until 90 days after last work
Statute of Limitations: Must file within 1 year of last work
⚠️ Missing these deadlines permanently bars recovery. Third-tier and lower parties have NO Miller Act protection.
State Little Miller Act Thresholds
Eight states require bonds on ALL public projects regardless of value: Arizona, Delaware, Mississippi, Montana, Ohio, Texas, Vermont, and West Virginia.
$20,000: Arkansas
$25,000: California, Hawaii, DC
$35,000: Washington (some)
$50,000: Alabama, Colorado, Idaho, Montana*, Oklahoma, Rhode Island, Utah, Wisconsin
$100,000: Connecticut, Florida, Georgia, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, West Virginia*, Wyoming
$150,000: Indiana, Washington
$300,000: North Carolina
$500,000: New York, Virginia
ALL PROJECTS:
• Arizona
• Delaware
• Mississippi
• Montana
• Ohio
• Texas
• Vermont
• West Virginia
Bond Percentage Requirements
Most states: 100% performance bond + 100% payment bond (often combined as performance and payment bonds)
Notable variations:
1. License or Permit Bonds
Guarantee contractor compliance with licensing laws, protecting consumers and the public. Required by state or local licensing authorities. Contractor license bonds are needed to obtain and maintain licenses in many states.
Coverage: License law violations, fraud, breach of contract, code violations, consumer financial losses
2. Performance Bonds
Guarantee project completion according to contract terms, protecting project owners. Mandatory on federal projects exceeding $150,000 under Miller Act. Get performance bonds from treasury-certified carriers.
Coverage: Project non-completion, substandard workmanship, contract breaches, costs to complete
Required: Federal $150K+, state/local at varying thresholds, private at owner discretion
3. Payment Bonds
Ensure contractors pay all subcontractors, suppliers, laborers, and material providers. Replaces mechanics' lien rights on public projects. Obtain payment bonds alongside performance bonds for federal and state projects.
First-Tier: No notice required
Second-Tier: 90-day notice to prime contractor
⚠️ Third-tier and lower: NO Miller Act protection
4. Bid Bonds
Guarantee winning bidders will enter contracts, execute documents, and provide required performance and payment bonds.
Forfeited When: Winning bidder refuses contract, fails to provide bonds, withdraws bid
Protection: Good faith mistakes generally protect against forfeiture
5. Maintenance/Warranty Bonds
Guarantee contractors will repair defects discovered after project completion (typically 1-2 years, up to 5 possible).
Premium: 1-4% annually (first year often free)
6. Supply Bonds
Guarantee material suppliers will deliver contracted materials. Less common, used on large projects requiring substantial or specialized materials.
7. Subdivision Bonds
Guarantee developers will complete required subdivision infrastructure (streets, sewers, sidewalks, utilities, drainage).
Release: Partial releases as phases completed/inspected
License Bond Rates
Performance/Payment Bond Rates
California $25,000 License Bond Costs by Credit Tier
| Credit Tier | FICO Score | Annual Premium | Rate % |
|---|---|---|---|
| Excellent | 800+ | $128 | 0.5% |
| Good | 720+ | $150-$165 | 0.6-0.66% |
| Fair | 650-699 | $183-$313 | 0.7-1.25% |
| Below Average | 600-649 | $500-$600 | 2-2.4% |
| Poor | 575-599 | $750-$1,125 | 3-4.5% |
| Very Poor | 525-574 | $2,000-$2,500 | 8-10% |
$500,000 Performance Bond Example
Standard Sliding Scale Rates
With 20% Credit (Strong Contractors)
Additional Cost Factors
Important: No single carrier offers lowest rates across all credit tiers. Rate differences of 40-100%+ exist between carriers for the same contractor. Working with multi-carrier agencies is essential for best pricing. For credit-challenged contractors, see our guide on getting bonds with bad credit.
| Aspect | Surety Bonds | Insurance |
|---|---|---|
| Who is Protected | Third parties (public, owners, subs, suppliers) | The contractor/policyholder |
| Reimbursement | Contractor MUST reimburse 100% of claims + costs | Insurance pays, contractor does NOT reimburse (except deductibles) |
| Cost | License: $100-$2,500/year; Performance: 1-3% of contract | GL: $500-$3,000/year; WC: $3,000-$10,000+/year |
| Structure | Three-party (principal, obligee, surety) | Two-party (insured, insurer) |
| Purpose | Guarantee contractor's obligations/performance | Protect contractor from accidents/losses |
Required Insurance Types Contractors Need
General Liability Insurance
Cost: $115-$152/month average
Covers: Third-party bodily injury and property damage
Required By: Landlords, clients, general contractors, lenders (not law)
Example: Client trips over contractor tools
Workers' Compensation
Cost: $254-$329/month average
Covers: Employee work-related injuries
Required By: Law in most states with employees
Example: Employee injured on job site
Errors & Omissions
Covers: Professional mistakes for contractors providing design services
When Needed: Design-build contracts
Builder's Risk
Covers: Buildings under construction
Protection: Fire, theft, vandalism, weather damage
Duration: During construction period
⚠️ Critical: Contractors Need BOTH Bonds and Insurance
They serve completely different purposes with different triggers. Operating without either puts contractors at severe financial risk. Bonds protect third parties from contractor failures. Insurance protects contractors from accidents and unexpected losses. You cannot substitute one for the other.
Claim Filed with Surety
Required documentation: Written notice, supporting contracts/invoices, proof of loss, evidence of contractor failure. Send via certified mail to all required parties.
Surety Acknowledges (1-5 days)
Assigns claim number and investigator, requests additional documentation.
Investigation Period (30-90 days)
Surety reviews documentation, interviews contractor and claimant, reviews contract terms, assesses validity, determines if contractor in default, evaluates damages. Contractors must cooperate fully per General Indemnity Agreement.
Surety Determination
If Invalid: Declination letter, no payment. If Valid: Informs contractor, gives opportunity to resolve directly, proceeds to payment if contractor doesn't resolve.
Surety Pays Valid Claims
Up to full penal sum, potentially including attorney fees and investigation costs.
Contractor Reimbursement Obligations
Contractors MUST repay 100% of:
- • Claim amounts paid
- • Investigation costs
- • Attorney fees
- • Consultant fees
- • Interest
- • Administrative costs
Reimbursement: Typically immediate upon demand
Consequences of Failure to Reimburse
Claim Statistics
⚠️ Critical: Contractor License Bonds Are State-Specific
Bonds do NOT transfer between states. Each state requires separate licenses and bonds. A bond posted in California provides ZERO coverage for work in Nevada or any other state.
Separate Requirements Per State
What Contractors Must Obtain in Each State:
- Separate licenses in each state
- Separate bonds for each state
- Meet each state's individual requirements (insurance, experience, testing)
- Maintain separate renewals on different schedules
Example: 5-State Contractor
Contractor working in CA, NV, AZ, OR, WA needs:
- • 5 separate state licenses
- • 5 separate bonds ($25K CA, $1K-$500K NV, $2.5K-$100K AZ, $15K-$80K OR, $30K WA)
- • Track 5 different renewal dates
- • Meet 5 sets of requirements
Annual bond costs: $500-$2,500+ depending on credit
Reciprocity Agreements (Limited Benefits)
California Reciprocity
States: Arizona, Louisiana, Nevada, Utah
Specific classifications only
Does NOT waive bonding requirements
Mississippi Reciprocity
States: Alabama, Arkansas, Louisiana, Tennessee
Varies by trade
Does NOT waive bonding requirements
What Reciprocity Provides:
- • Waives trade examination requirements (but NOT business/law exams)
- • Does NOT waive bonding requirements
- • Does NOT eliminate licensing applications
- • Requires holding current licenses in reciprocal states for specified periods (often 5 years)
Cost Implications
- • Bond premiums paid separately for each state ($100-$500+ per state annually)
- • Multiple license application and renewal fees
- • Potentially multiple exams without reciprocity
- • Tracking multiple renewal dates and requirements
- • Administrative costs for multi-state compliance
Strategies for Multi-State Operations
Licensing Strategies
- • Research reciprocity opportunities before expanding
- • Prioritize states with reciprocal agreements
- • Use NASCLA-accredited exams where accepted (16 states for Commercial General Building)
Operational Strategies
- • Work with surety brokers familiar with multi-state bonding
- • Establish compliance calendars for multiple renewal dates
- • Consider joint ventures with licensed local contractors
- • Some contractors form separate entities per state
⚠️ Critical: No Grace Period for Performing Work
Tennessee explicitly states: "There is not a grace period to perform work while expired." Most states have no grace period for performing work. Licenses are invalid immediately upon bond expiration.
Renewal Frequency
Annual Renewal
Most contractor license bonds require annual renewal. Bond continues for additional year upon premium payment.
Biennial (2-Year)
Some states (Washington, Tennessee, California, Nevada) operate on 2-year cycles.
Multi-Year Options
Contractors can purchase 2-3 year bonds upfront with small discounts (typically 5-10%).
Consequences of Bond Lapse
Immediate License Invalidity
- • License becomes invalid immediately upon bond lapse
- • Cannot legally contract for work
- • Work performed while unlicensed = violations and fines
- • May lose lien rights for work performed
Financial & Legal Consequences
- • Late renewal fees (Tennessee: $20/month after expiration)
- • Some states cannot renew if bond lapsed—complete reapplication required
- • Contracting without bonds = misdemeanor charges in many states
- • Inability to recover payment for unlicensed work
Renewal Process
Surety Sends Renewal Notice
30-90 days before expiration with renewal premium and updated terms
Contractor Updates Information
Any changed business information, addresses, ownership, etc.
Credit Re-Evaluation
Credit may be re-evaluated. Rates can improve OR worsen based on credit changes.
Payment & Filing
Contractor pays renewal premium. Surety files continuation certificate or new bond with state.
Confirmation
Contractor receives confirmation of renewal and coverage continuation
State-Specific Timing Requirements
• Tennessee: Requires renewals 30 days prior to expiration. Allows renewal up to 12 months after expiration before new application required. After 12 months, complete new license application required.
• Nevada: Requires 60 days notice for cancellation by surety
• Washington: Requires new bonds posted before renewal if bonds have expired
• Most states: Require 15-90 days advance notice for cancellation
State-by-State Contractor License Bond Requirements
Complete 50-state analysis of contractor licensing bonds. Covers 19 states requiring bonds, conditional requirements, and recent 2024 legislative changes.
Read Full Guide →Electrical Contractor Bond Requirements
Complete 50-state guide to electrical contractor licensing bonds. Only 18 states require bonds ($1K-$500K). Verified from official .gov sources.
Read Full Guide →Getting Bonds with Bad Credit
Complete strategies and insider secrets for obtaining surety bonds with poor credit. Alternative underwriting methods and specialized programs.
Read Full Guide →Get Your General Contractor Bond
Fast approval for general contractor license, performance, and payment bonds. Competitive rates from treasury-certified carriers. Licensed in all 50 states.
Get Quote →Primary Official Government Sources:
- State contractor licensing boards (all 50 states + DC)
- U.S. Department of Treasury - Surety Bond Program
- Federal Acquisition Regulation (FAR)
- 40 U.S.C. §§ 3131-3134 (Miller Act)
- State Little Miller Act statutes (all states)
- Official state statute databases and administrative codes
- State legislative tracking systems for recent changes
Industry Organizations:
- Surety & Fidelity Association of America (SFAA)
- National Association of Surety Bond Producers (NASBP)
Methodology:
All information verified through official .gov sources as primary documentation. Cross-referenced with state contractor licensing boards, federal statutes (Miller Act, FAR), recent legislative session records, and authoritative industry organizations (SFAA, NASBP). Legislative changes tracked through official state legislative tracking systems, Governor press releases, and codified statute citations.
Document Information: Research completed November 25, 2025 | Geographic coverage: All 50 U.S. states + DC | Verification: Primary official government sources with secondary cross-reference
Disclaimer: This document is intended as an authoritative research compilation of publicly available information regarding contractor bond requirements. It does not constitute legal advice. Individuals and businesses should verify current requirements with applicable licensing boards and contracting agencies before bidding on projects or applying for licenses. Requirements are subject to change through legislative action, administrative rulemaking, and regulatory updates.