CALIFORNIA
SURETY BONDS.
BUILT SOLID.

A surety bond is a three-party agreement between the principal (contractor), the obligee (government agency or project owner), and the surety company. The surety guarantees the principal will fulfill their obligations. Unlike insurance, if the surety pays a claim, they have the right to seek full reimbursement from the principal. Bonds are credit instruments — the surety is vouching for your ability to perform.

Yes. California's CSLB requires all licensed contractors to maintain a $25,000 contractor license bond at all times (Business & Professions Code § 7071.6). The bond protects consumers and employees who suffer damages from a contractor's unlicensed or fraudulent work. A lapsed bond results in automatic license suspension. If the license is held by an LLC, CSLB requires a second, separate bond as well: a $100,000 employee/worker bond (Business & Professions Code § 7071.6.5), which covers wages and benefits owed to workers. It is in addition to the $25,000 license bond, not a substitute for it.

A disciplinary bond is filed with the CSLB Registrar to reinstate or reissue a license revoked for a violation of the Contractors License Law (Business & Professions Code § 7071.8), and CSLB also requires one following a suspension. It is filed in addition to every other bond the license requires, and it cannot take the place of, or be combined with, any of them. The Registrar sets the amount from the seriousness of the violation: not less than $25,000, and not more than ten times the contractor license bond. It must stay on file for at least two years, and that clock runs only while the license is active.

The CSLB contractor license bond is $25,000 in face value. Most contractors with good credit pay $100–$250/year in premium — a small fraction of the bond's face value. Contractors with poor credit may pay $250–$750/year or need to post collateral. The annual premium is the only out-of-pocket cost — the $25,000 bond amount is not paid upfront.

A performance bond guarantees project completion if the contractor defaults. A payment bond guarantees that all subcontractors, suppliers, and laborers are paid. They serve different purposes and protect different parties. On most public California projects, both are required together. They're typically written as a combined package.

No — they're fundamentally different. Insurance protects the insured (you) from losses, and the insurer pays claims without expecting reimbursement. A surety bond protects the obligee (your client or the government) and if the surety pays a claim, they seek full reimbursement from you. Bonds and insurance both serve the contractor — they cover completely different risks.

CSLB contractor license bonds can often be issued same day or next business day for most contractors. The application is simple — license number, business name, personal information, and a soft credit check. Performance and payment bonds for large projects require more underwriting and typically take 3-10 business days depending on project size and contractor financials.

If the surety pays a claim, they have the legal right to seek full reimbursement from you — the principal. This is different from insurance, where claims don't generally create reimbursement obligations. This is why bond underwriting looks heavily at your creditworthiness and financial stability. Maintaining your bond in good standing requires performing your obligations and resolving any disputes before they become claims.