Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 7 minutes
In the United States, the requirements for contractors to carry general liability insurance and obtain a contractor’s bond are important legal considerations that vary significantly from state to state. These requirements help protect both the contractors and their clients, ensuring that contractors are financially responsible and adhere to state regulations.
Western States
California
California contractor compliance depends on license type and business structure.
- Bonds: California requires a $25,000 contractor’s bond, and LLC contractors must carry a $100,000 LLC surety bond in addition to the contractor’s bond. Additional bonding may apply when the qualifier is not an owner/officer.
- General liability insurance: Not required for every licensee type, but LLC contractors must maintain liability insurance with a minimum $1,000,000 cumulative limit.
- Workers’ compensation (critical update): CSLB references BPC 7125.2 becoming operative January 1, 2026, requiring workers’ compensation coverage for contractors. Confirm applicability and compliance details directly with CSLB.
Nevada
Nevada requires a contractor license bond (continuous) as part of licensing.
- Bonds: Applicants/licensees must file a continuous contractor license bond with the Nevada State Contractors Board; the bond amount is set by the Board based on classification, monetary limit, finances, and history (often ranging from $1,000 up to $500,000). Certain categories may have additional consumer protection bond requirements.
- General liability insurance: Nevada’s licensing framework emphasizes bonding/financial responsibility. Many contractors still carry CGL because owners, GCs, and commercial contracts frequently require it.
Oregon
Oregon is one of the stricter states for both bonding and insurance.
- Bonds: Oregon requires a CCB surety bond, and bond amounts increased effective January 1, 2024. Current bond amounts vary by endorsement (for example, residential general is $30,000, residential specialty $20,000, and commercial general Level 1 is $80,000).
- General liability insurance: Oregon requires contractors to maintain liability insurance continuously. Minimum required limits vary by license type (residential is listed at $500,000; commercial general can be up to $2,000,000 depending on level).
Washington
Washington requires both a contractor bond and minimum liability insurance as part of contractor registration.
- Bonds: Washington contractor registration requires a continuous surety bond. Current standard bond amounts are $30,000 for general contractors and $15,000 for specialty contractors.
- General liability insurance: Washington requires proof of liability insurance meeting minimum statewide thresholds (commonly expressed as $200,000 public liability and $50,000 property damage, or $250,000 combined single limit). These are minimums—many commercial or public contracts require higher limits.
Southern States
Florida
Florida requirements vary by contractor category and licensing situation.
- Bonds: Florida does not impose a single statewide “contractor license bond” requirement for every contractor. However, certain applicants must obtain a Financially Responsible Officer (FRO) bond (commonly $100,000) depending on the business structure and license scenario.
- Financial stability: Florida uses financial responsibility/stability standards, including a credit score threshold of 660 and/or completion of a required financial responsibility course depending on the applicant’s situation. Avoid describing this as a universal “credit-score bond” requirement.
- General liability insurance: Florida requires proof of insurance for licensure, with minimum amounts set by rule and varying by contractor division/type. Present these as minimum licensing requirements and advise contractors to carry limits that match contract and risk exposure.
Georgia
Georgia emphasizes financial responsibility and minimum liability insurance.
- Bonds/financial responsibility: A $25,000 surety bond is commonly used but is generally one of several acceptable ways to demonstrate financial responsibility (other methods can include minimum net worth, bank references, or letters of credit, depending on license type).
- General liability insurance: Georgia requires proof of liability insurance with minimum limits that vary by license class (for example, residential basic at $300,000, and residential light commercial/general contractor at $500,000 per occurrence).
Texas
Texas is primarily local for general contracting, but some trades are state-regulated.
- Bonds: Texas does not have a single statewide contractor licensing board for general contractors/home builders. Bond and registration requirements are commonly set at the city/county level and can vary significantly by jurisdiction and trade.
- Insurance: Many owners, municipalities, and commercial contracts require CGL (often higher limits than small residential jobs). In addition, certain specialty trades may have separate state licensing rules.
Midwestern States
Minnesota
Minnesota does have statewide requirements for certain contractor types (especially residential).
- Licensing & insurance: Minnesota’s Department of Labor and Industry licenses residential building contractors/remodelers and requires liability insurance meeting stated minimums (including per-occurrence, aggregate, and property damage requirements).
- Bonds: Bond requirements can vary by license type and local permitting; always verify state program and local permit rules.
Michigan
Michigan licensing varies by trade and credential type.
- Bonds & insurance: Michigan does not publish a universal statewide contractor license bond and fixed CGL minimum for every contractor type in a way that applies across all trades and local jurisdictions. Many contractors still carry CGL due to permit and contract requirements.
Wisconsin
Wisconsin has a specific requirement for dwelling contractor qualifiers.
- Bond or insurance: Wisconsin DSPS indicates dwelling contractor qualifiers must submit either a surety bond of at least $25,000 or general liability insurance of at least $250,000 per occurrence (as part of credentialing).
- Local requirements: Municipalities and project owners may impose additional limits or endorsements.
Northeastern States
New York
New York is primarily local for general contractor licensing.
- Bonds & insurance: There is no single statewide contractor license bond requirement for all contractors. Requirements are often set by cities/counties (especially for home improvement licensing). General liability is frequently required by contracts and local permit offices.
Massachusetts
Massachusetts has statewide programs for certain contractor categories (not always “general contractor licensing”).
- Statewide program example: Massachusetts regulates home improvement contracting via registration and rules under the Home Improvement Contractor program framework.
- Bonds & insurance: Bonding/insurance requirements often come from local permitting authorities, contracts, or specific tax/agency rules depending on the project type and where the work is performed.
Pennsylvania
Pennsylvania requirements depend heavily on trade and locality.
- Bonds & insurance: Pennsylvania does not impose a blanket statewide general liability or license bond requirement for all contractors. Local licensing and public works rules can create bond/insurance obligations.
Southeastern States
South Carolina
South Carolina bonding depends on contractor category and how the applicant satisfies financial responsibility.
- Bonds (general & mechanical contractors): South Carolina allows a surety bond in lieu of a financial statement for general and mechanical contractor licensure, with bond amounts tied to the license group (for example, general contractor group bond levels range from $20,000 to $350,000).
- General liability insurance: The Board’s general/mechanical licensure guidance emphasizes group limits and financial documentation rather than stating a single CGL minimum for all licensees. However, other contractor categories (e.g., alarm/sprinkler) and many project owners may require liability insurance, often at $1M/$2M or higher depending on risk and contract terms.
North Carolina
North Carolina requirements depend on project type and contract terms.
- Bonds & insurance: North Carolina does not generally require a blanket license bond for all contractors, and general liability requirements are often contract-driven (public projects, private owners, property managers, etc.). Verify requirements by license classification and project type.
Tennessee
Tennessee clearly ties general liability minimums to monetary limits.
- Bond and General liability: State contractor license (projects $25,000+) — bond is not automatically required, but can be used for the monetary limit. Tennessee requires proof of general liability insurance for contractor licensing, and the minimum amount depends on the contractor’s monetary limit (e.g., $100,000, $500,000, or $1,000,000 minimums based on the stated tiers).
- Workers’ comp: Proof of workers’ comp or a valid exemption pathway is part of the licensing process.
Central States
Colorado
Colorado is largely local for contractor licensing.
- Bonds & insurance: Many cities require local contractor license bonds and minimum liability insurance, but requirements vary widely by municipality and trade. Always confirm with the city/county issuing permits and any owner/GC contract requirements.
Missouri
Missouri is commonly local for contractor licensing.
- Bonds & insurance: Local jurisdictions may require license bonds and proof of general liability insurance. Requirements vary by municipality, trade, and project.
Kansas
Kansas is commonly local for contractor licensing.
- Bonds & insurance: Local licensing/permit bonds and insurance requirements vary by city/county and trade classification. Contractors should confirm requirements where the work will be performed.
States Where Local Rules Often Drive Requirements
Indiana, Kentucky, Nebraska, Wyoming
In these states, many contractor requirements are frequently driven by local jurisdiction rules, public project requirements, and private contract terms. Even where the state does not impose a universal contractor bond/insurance rule, it is common for permits, public works, and commercial clients to require:
- A contractor license/permit bond, and/or
- CGL at limits that match the owner’s risk standards.
Conclusion
Understanding and complying with your state’s requirements for general liability insurance and contractor bonds is crucial for the success and legality of your contracting business. These measures not only ensure that you are operating within the law but also protect you and your clients from potential financial risks. Always check with state and local authorities to ensure that you meet all requirements, and consider consulting with an insurance professional to make sure you are fully covered.
