A contractor bond simply assures the party who hired the contractor that the project will be finished as specified. Even though the contractor may be licensed and insured, the contractor’s bond protects the customer against the possibility of non-completion of the project.
If it occurs that the specific job that is covered in the bond is not completed as originally agreed upon, then the agency who issued the bond will provide the customer with a full compensation monetarily for the incomplete project. In many cases, licensing agencies will also require that the contractor be bonded in order to be in qualification for their contractor’s license. Having contractor insurance also helps put the party buying at ease knowing the contractor they are doing business with is properly insured.
This requirement that a contractor be bonded can vary from state to state and city to city, so if you are embarking upon a remodeling or a building project with a contractor, it would be in your best interest to inquire about the bonding circumstances of the contractor with whom you are dealing. If the contractor is not bonded, or refuses to get bonding where it is available, then you have the option to move on to a contractor who will be more receptive to your wishes.
In most states it is possible to verify the bonding status of a contractor by checking with the local or state authorities. So no matter what the contractor tells you, you can double check on the status and verify for yourself whether or not an up to date bond actually exists. You can also ask the contractor for his bond number as well as his certification.
Not only will a bond protect you from an uncompleted project, it will also protect you from having a mechanic’s lien slapped on you for unpaid suppliers and unpaid workers wages, if a contractor skips out of the agreed upon project.