Bonds
California contractor bonds: which ones you need, and which you don't
There are two families of bonds that people mix up constantly. License bonds are what CSLB requires before you can work at all. Public works bonds are what each agency requires for each project. Neither is insurance, and neither protects you.
$25,000
The bond every active license needs.
$25,000
Extra when an RME qualifies the license.
$100,000
Extra for every LLC, for its workers.
License bonds
CSLB doesn't sell bonds. You buy them from a surety, which charges you an annual premium. These are the ones the law can require for a license:
Contractor's bond
$25,000Every active license (B&P §7071.6). A $25,000 cashier's check deposited with CSLB is accepted instead.
Bond of qualifying individual
$25,000When the person qualifying the license isn't the sole owner or a general partner — an RME, for example (B&P §7071.9).
LLC employee/worker bond
$100,000Every LLC license, on top of the $25,000 bond. Protects workers' wages and benefits (B&P §7071.6.5).
Disciplinary bond
$25,000 to $250,000Only if CSLB requires it to restore a license after disciplinary action (B&P §7071.8).
Not sure whether your qualifier is an RMO or an RME? That decides whether you need the second bond. Here’s the difference.
“Licensed and bonded”: what you can't advertise
“Licensed, bonded and insured” is one of the most common phrases in contractor advertising. In California, the “bonded” part can cost you your license.
The law bars advertising that you're “bonded” when it refers to the license bond or a disciplinary bond (B&P §7027.4(b)), and referring to any legally required bond in advertising is grounds for suspension (B&P §7071.13). The reasoning: every licensed contractor has that bond by law, so selling it as a feature misleads the customer. And if you say “insured”, you have to say what kind of insurance.
Fixing the ad
“Licensed, bonded and insured”
“CSLB License #1234567 · General liability insurance”
Show your license number, name the insurance type, and drop “bonded”.
Public works bonds
These have nothing to do with your license. The agency requires them for each project, and the amount depends on the contract. Always read the bid documents for the exact figure.
| Bond | Amount | What it does |
|---|---|---|
| Bid bond | At least 10% of the bid (state contracts) | Guarantees the winner signs the contract. |
| Payment bond | 100% of the contract, on contracts over $25,000 | Pays subs, suppliers and laborers who weren't paid. |
| Performance bond | At least half the price (State Contract Act) | Guarantees the work gets finished as contracted. |
The payment bond is mandatory on every public works contract over $25,000 and is delivered before work starts (Civil Code §9550). There are no mechanics liens on public works: anyone unpaid uses a stop payment notice or a claim against this bond. And those same projects almost always carry prevailing wage.
Don't mix them up: the contractor's bond and the qualifier bond are $25,000 each. The LLC bond is $100,000 and protects only workers. None of them is a payment or performance bond for a customer's whole project.
What does it all cost together, with CSLB fees, exams and fingerprints? See the full cost of a license.
FAQ
How much does a contractor bond cost?
The bond is $25,000, but that's not what you pay — it's the amount guaranteed. You pay a surety an annual premium that depends mostly on your credit. CSLB doesn't set or publish that premium, so we won't invent a figure. Get quotes from two or three sureties.
Does the bond protect me?
No. It protects the public: homeowners improving their own home, people harmed by fraud or willful violations, and unpaid workers (B&P §7071.5). If the surety pays a claim, you have to pay the surety back.
When do I file the bond?
After you pass the exam. CSLB sends a notice and you have 90 days to pay the initial license fee and file your bonds, or the application is void (B&P §7074). A bond CSLB receives within 90 days of its effective date is accepted retroactively.
What happens if my bond is cancelled?
Cancellation takes effect 30 days after CSLB receives the surety's notice. If you don't file a replacement before then, your license is suspended.
Do I need the qualifier bond if I'm the owner?
Not if you're the sole owner or a general partner. Not either if you're the RMO and own 10% or more of the voting stock, or an LLC qualifier with at least a 10% membership interest (B&P §7071.9).
Does my LLC need anything else?
Yes. On top of the $25,000 and $100,000 bonds, liability insurance of at least $1,000,000 aggregate with five or fewer people on the personnel of record, plus $100,000 for each additional person, up to $5,000,000 (B&P §7071.19).
Bonds are on the exam
The amounts look alike and the exam knows it: $25,000, $100,000, 10%, 100%, half. Try 20 free questions and see which ones you mix up.
Official sources: CSLB bond requirements · B&P §7071.6 · B&P §7071.6.5 · B&P §7071.9 · B&P §7071.19 · B&P §7027.4 · B&P §7071.13 · Civil Code §9550