Short answer: insured means the contractor carries liability insurance, which pays for damage or injury caused by the work. Bonded means a surety company has backed the contractor for a set amount, which people harmed by a violation of the licensing law can claim against. They are two different protections, and neither one is set aside for your deposit.
Hiring someone now? In Washington, look up their license, bond and insurance right now, free. In any state, email us one contractor's name and state and we will send back what the state board shows on their license, free.
Bonded vs insured, side by side
| Insured | Bonded | |
|---|---|---|
| What it is | A liability insurance policy the contractor buys | A surety company's promise to the state, up to a set amount |
| Pays for | Damage or injury caused by the work | Claims over license-law violations, including defective work and, in California, unpaid wages |
| Who it is for | People and property hurt by the work | Every claimant, shared: homeowners and unpaid workers draw on one amount |
| Required amount in Washington | $250,000 combined, or $200,000 liability plus $50,000 property damage | $30,000 for general contractors, $15,000 for specialty contractors |
| Required amount in California | Depends on the license; ask for the policy | $25,000 |
Sources: Washington L&I and California's Contractors State License Board, read October 30, 2026. Other states differ, and some require neither; the state board's page is the check.
Does bonded mean insured?
No. A bond and an insurance policy are separate, and "bonded" on a truck or a website says nothing about the policy. Washington requires both before it registers a contractor, and its board lists them separately. Elsewhere the rule depends on the state, so ask about each one by name and check each one.
What does bonded mean for a business?
It means a surety company has backed the business for a set amount, and people it harms can claim against that amount. For a contractor, that bond is usually the one the licensing law requires. Other trades can carry other kinds of bond, so when a business says "bonded", ask what the bond covers, for how much, and who issued it. That is general guidance; the board's page is the check for a contractor.
What is a contractor bond?
A surety company's promise to the state, up to a set amount, that people harmed by a violation of the licensing law can claim against. The amount is set by the state: in Washington $30,000 for general contractors and $15,000 for specialty contractors, in California $25,000.
Why a bond is smaller than it sounds
A bond has one amount for every claim against that contractor. California's board warns homeowners that its $25,000 bond is often not enough to cover several complaints, or a project worth more than the bond, and that a bond does not assure a contractor's competence or integrity. Its advice is worth reading.
A real example: one Washington roofer we checked has a $15,000 bond on file. One Seattle permit under the same company was estimated at $70,796, so the bond is about a fifth of that one job, and any other claimant shares it. That is not a mark against the roofer. It is what the law requires of a specialty contractor, and it is why the bond should not be your plan for getting a deposit back.
What neither one covers
- Your deposit. Nothing here holds your money in reserve. Keep deposits small and tie payments to finished, inspected work. Some states cap them.
- Workmanship by itself. General liability policies usually pay for damage the work causes, not the cost of redoing poor work. Read the policy or ask the agent.
- Injured workers. Workers' compensation is a separate policy. California's board tells homeowners to verify it too, since a homeowner's own insurance may or may not pay.
- A clean record. A current bond and policy say nothing about permits never signed off, or what the courts hold.
About to pay a deposit? The Contractor Due Diligence Report checks all of this on one contractor, in any state, within two business days.
What "licensed, bonded and insured" means
Three separate claims, and each one can be checked. Licensed means the state or local board has the contractor on its books for a certain kind of work. It does not always exist at state level: Texas, New York, Illinois and Colorado have no statewide general contractor license, and leave it to the city or county. Every state's official lookup is here.
How to check both before you pay
- Look up the license on the state board's own site, not a badge in the proposal. Several boards list the bond and the insurer with their amounts and dates. Washington's Verify tool is one (how to read it).
- Ask the insurer, not the contractor, for a certificate of insurance naming you as certificate holder.
- Match the names. The business on the bond, the policy, the license and your contract should be the same business.
- Read the claims. Washington shows lawsuits against the bond. In other states the board's page is the place to look.
How to vet a contractor before you sign covers the other public records: courts, board discipline and permits.
Or have it checked for you
The Contractor Due Diligence Report checks the license, bond, insurance, courts and permits on the contractor you are about to hire, in any state, within two business days, with every finding sourced and dated. Read a real sample report (a Washington roofing contractor, names withheld). It is a public-record review of the business, not a background check on any person and not legal advice.
Already hired, in Washington? A bond or a policy can lapse after the contract is signed. Lapse Watch reads your contractor's license, bond and insurance on file with L&I every day and emails you if one lapses: $19 a month, cancel anytime.