United States
Hong KongBonding and insurance requirements
Licensing states typically require a license bond and proof of insurance, usually general liability and workers compensation. These are license conditions rather than examination requirements, and amounts are set by each state.
Nothing to do with passing. Everything to do with getting licensed afterwards.
A bond is not insurance
Insurance protects you. A bond protects somebody else, and if the surety pays out it comes back to you.
That distinction is worth understanding before you buy either, and it appears on the exam as well.
The license bond
Most licensing states require a bond as a condition of the license, guaranteeing you will comply with the licensing statute. The amount is set by the state and often varies by classification.
You pay a premium rather than the face amount, and the premium depends on your credit and financial position. A weak position costs more or requires collateral.
Insurance
- General liability, at limits the state specifies
- Workers compensation, where you have employees
- Commercial vehicle cover for company vehicles
- Builder's risk on specific projects, usually a contract requirement rather than a license one
The limits a state requires for a license are a floor. Commercial owners and general contractors routinely require higher limits and specific endorsements, and the license minimum will not win you work.
Multi-state adds up
Every state you license in has its own bond. Reciprocity carries the exam result and not the bond, so a contractor licensed in six states carries six bonds.
That is a real annual cost and it is the part people forget when planning a multi-state expansion.
Where to get the numbers
The state licensing board publishes required amounts and acceptable forms. Do not rely on a broker's summary for the requirement itself.
Common questions
Do I need a bond for the NASCLA exam?
No. Bonding is a license condition set by each state, not an examination requirement.
What is the difference between a bond and insurance?
Insurance protects you. A bond protects someone else, and the surety seeks reimbursement from you after paying.
What insurance do states require?
Typically general liability at specified limits, and workers compensation where you have employees.
Are license limits enough for commercial work?
Usually not. Owners and general contractors routinely require higher limits and specific endorsements.
Does one bond cover multiple states?
No. Each state you license in has its own bond requirement.