Licensed vs. bonded vs. insured: what's the difference?
Licensed means CSLB has verified the contractor's qualifications and authorized them to work. Bonded means a contractor bond, a limited $25,000 financial guarantee tied to the licensing law, is on file. Insured means the contractor carries insurance: workers' compensation for their crew and, separately, general liability for damage. Only LLC licensees are required to carry general liability insurance, so for everyone else you have to ask. A good contractor has all three protections.
Verified against CSLB on · reflects current CSLB rules and California law.
Summary — key takeaways
- Licensed: CSLB verified qualifications and authorized the contractor to work.
- Bonded: a limited $25,000 guarantee tied to the licensing law (B&P §7071.6).
- Insured: workers' compensation for the crew and general liability for damage.
- A bond is not insurance and won't cover most property damage.
- Liability insurance is only mandatory for LLC licensees; everyone else can legally skip it, so ask.
Licensed: verified and authorized
Licensed is the foundation: to hold a CSLB license, a contractor passed trade and law exams, met experience requirements, and maintains the required bond. You verify it by status (Active) and by a classification that matches your job. Remember that the business holds the license through its qualifier; individual crew members are not separately licensed by CSLB.
Bonded: a limited financial guarantee
Bonded refers to the contractor bond required under Business & Professions Code §7071.6, currently $25,000 (a $25,000 cash deposit with CSLB is an accepted alternative). It's a limited fund that people harmed by violations of the licensing law, such as a homeowner damaged on their own residence or a worker who wasn't paid, can claim against through the surety. It is not broad insurance, it is not a warranty fund, and it won't cover most property damage.
Insured: workers' comp and liability
Insured covers two separate things: workers' compensation, which protects the crew (and you) if someone is hurt on the job, and general liability insurance, which covers property damage and injuries the contractor causes. CSLB tracks workers' comp for every licensee, but it tracks liability insurance only for contractors licensed as LLCs, which must carry at least $1,000,000 of it under Business & Professions Code §7071.19. For every other business type, liability insurance is optional, so ask for a current certificate of insurance and verify it with the insurer.
Frequently asked questions
Is a bonded contractor the same as an insured contractor?
No. A bond is a limited financial guarantee tied to the licensing law (currently $25,000). Insurance, meaning workers' compensation and general liability, provides much broader protection against injury and property damage. A contractor should be both bonded and insured.
Does being licensed mean a contractor is insured?
Not necessarily. A license requires the bond and, for many classifications, workers' compensation, but general liability insurance is only mandatory for contractors licensed as LLCs (B&P §7071.19). A sole proprietor or corporation can be fully licensed with no liability insurance, so confirm coverage directly.
Are California contractors required to carry liability insurance?
Only LLC licensees. Under Business & Professions Code §7071.19, an LLC must carry at least $1,000,000 in liability insurance, scaling up with the number of people on its license record, and the insurer files proof with CSLB. For all other contractors it's optional, which is why asking for a certificate of insurance matters.
What happens if an uninsured worker is injured at my property?
You can be exposed. CSLB warns homeowners that if workers are injured and the contractor carries no workers' compensation, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy, or face a lawsuit. That is the practical reason to confirm workers' compensation on the license record, and to be especially careful with roofing, concrete, HVAC, asbestos, and tree work, where coverage is required regardless of employees.
Which matters most: licensed, bonded, or insured?
All three. Licensed confirms authorization and qualifications, the bond gives a limited claim fund, and insurance protects you against injury and damage. Start with an Active license, then confirm the bond and insurance.
Verify a contractor