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Bonded vs. insured
Published 2026-06-12 · by Brokly
| Aspect | Bonded | Insured |
|---|---|---|
| Who it protects | The other party — a customer, or the licensing board | You — your business, your people, your property |
| What happens after a payout | The bond company (the "surety") collects the money back from you | The insurer absorbs the covered loss — that's what premium buys |
| Why you have it | A license board or project owner requires the guarantee | Leases, contracts, state law — and protecting what you've built |
| The document | A surety bond, filed with the board or owner | A policy; proved to others with a certificate of insurance |
Who it protects
Bonded: The other party — a customer, or the licensing board
Insured: You — your business, your people, your property
What happens after a payout
Bonded: The bond company (the "surety") collects the money back from you
Insured: The insurer absorbs the covered loss — that's what premium buys
Why you have it
Bonded: A license board or project owner requires the guarantee
Insured: Leases, contracts, state law — and protecting what you've built
The document
Bonded: A surety bond, filed with the board or owner
Insured: A policy; proved to others with a certificate of insurance
"Bonded" sounds like protection, but a contractor license bond is the licensing board's guarantee, funded by you — if the bond pays a customer or the state because you broke the board's rules, the surety company turns around and collects from you. Insurance is the opposite arrangement: a covered loss is the insurer's to absorb.
Whether a license requires a bond — and for how much — is set trade by trade and state by state; our state pages quote each board's own rule. Plenty of states require none at all, and some condition the license on insurance instead of a bond.
See how this plays out for your trade: electricians · painters · carpenters · roofers
Related terms
Descriptions reflect how these coverages typically work — exact terms live in the policy. Not legal or compliance advice.
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