Insurance and bonding are the two things a client, a general contractor, or a licensing board will almost always ask you to show — and they're constantly confused for each other.
Where this comes from. The SBA bond and insurance overviews are federal; required coverages and limits are set by each state; and the cost ranges are private insurance-industry figures, not government data — ballparks to sanity-check a quote.
Insurance protects you, a bond protects your client
- Insurance protects YOU. You pay premiums; if something goes wrong, the insurer pays the loss and you don't pay it back.
- A bond protects your CLIENT. If you don't finish or don't follow the rules, the surety pays the harmed party — and then you repay the surety. A bond is a guarantee of your work, not a safety net for you.
Insurance you'll actually need
- General Liability (GL) — the admission ticket. Third-party injury and property damage. Limits typically start at $1M / $2M. Nearly every GC and board requires it.
- Workers' Compensation. Required by state law in nearly every state once you have employees — sometimes from the first one.
- Commercial Auto. Your personal policy excludes business use of your work truck or van.
- Tools & Equipment (inland marine). Covers your gear against theft or damage.
- Cyber liability (emerging). Minor for most handymen today; worth knowing as you grow.
Confirm requirements with your state's department of insurance and licensing board.
Bonds you'll run into
- License / Permit bond. Often required just to get licensed. Most contractors with good credit pay about $100–$500 a year.
- Contract bonds — for bigger and public jobs. A bid bond (you'll honor your price), a performance bond (you'll finish), and a payment bond (you'll pay your subs and suppliers).
The SBA Surety Bond Guarantee Program
The one most small contractors miss. If you can't get bonded commercially, the SBA guarantees a portion of your bid, performance, and payment bonds so a surety will bond you.
- Limits: individual contracts up to $9 million (up to $14 million on certified federal contracts).
- Not covered: commercial license/permit bonds. See SBA Surety Bonds.
What it costs (ballpark)
Rough industry ranges, not quotes — your real number depends on trade, state, payroll, and credit.
| What | Approximate annual cost |
|---|---|
| Solo painter/handyman — total insurance | ~$2,000–$5,000 |
| Roofer with employees — total insurance | ~$8,000–$25,000+ |
| License / permit bond (good credit) | ~$100–$500 |
The biggest driver is workers' comp, which scales with payroll and trade risk.
The caveat: the numbers are set by others
Your required coverages and limits come from your state, each GC's contract (often higher than the state minimum), and the obligee on a bonded job. Two terms GCs use: a Certificate of Insurance (COI) (proof of coverage) and Additional Insured (adding the GC to your GL policy). Read every contract's insurance and bond terms before signing, and keep your COI current.
Quick-start checklist
- Get a General Liability quote ($1M/$2M is the usual starting point)
- Get workers' comp if you have — or plan to hire — employees
- Put your work truck/van on a commercial auto policy
- Insure your tools & equipment
- Check whether your state or city license requires a bond
- Ask each GC what COI limits and additional-insured they require
- Explore the SBA bond program if you want public work but can't get bonded commercially
- Keep your Certificate of Insurance current