Bonding and insurance for contractors: what a bid actually requires
Bonding and insurance are two different products, and the ones your state requires for registration are usually not the ones a project asks for. In Washington, registering with Labor and Industries means carrying a surety bond and a liability policy at set minimums. A bid bond, a performance bond, or a certificate naming somebody else as additional insured is a separate request tied to one job, arranged on top of the first two.
The registration bond is the small one
Washington requires a $30,000 bond for a general contractor and $15,000 for a specialty contractor to hold an active registration. Those figures rose on July 1, 2024, so older advice quotes numbers that no longer apply. Higher tiers apply to contractors carrying prior residential judgments.
The bond protects your customers rather than you. It is a pool a customer, a supplier, or a worker can claim against when you do not pay or do not finish, and if the surety pays a claim it comes back to you for the money. Treat it as the cost of being registered rather than coverage you are carrying.
Liability insurance: the state floor and the number a job will ask for
Registration also requires general liability at $200,000 public liability plus $50,000 property damage, or a $250,000 combined single limit, with Labor and Industries named as certificate holder. If the policy lapses the registration goes invalid with it, and anything performed in that gap was performed unregistered.
That minimum satisfies the state and very little else. Commercial owners, property managers, and general contractors commonly want a million per occurrence with a two million aggregate before they will send a contract, and some want higher. Find out what the buyers in your lane expect before you build a bid around a policy that cannot clear their front desk.
Workers compensation in Washington runs through the state fund instead of a private carrier, so the certificate an out of state general contractor gets back does not look like the ones he sees everywhere else. Proof of coverage comes from Labor and Industries. Send it with an explanation the first time rather than letting an accounting department sit on it.
Additional insured is a real request, not a formality
When a GC asks to be named additional insured, sometimes with a waiver of subrogation or primary and noncontributory wording, he is asking your carrier to extend your policy to cover him for what your crew does on his job. Your agent has to issue that endorsement, it usually costs something, and it takes a day or two you will not have on bid day.
Ask each general contractor once what their standard requirement is, then keep a certificate on file that already meets it. Having the packet ready before anyone asks is most of what a general contractor checks first.
Bid, performance, and payment bonds
These bonds attach to a specific project, and a surety underwrites them separately from your license bond. A bid bond promises that if you win you will sign at the price you submitted, and on Washington public works it is usually five percent of the bid. A performance bond and a payment bond, often written together at the full contract amount, guarantee that the work gets finished and that your subs and suppliers get paid.
Public agencies require them on most work, though many allow retainage in place of a bond on small contracts. That threshold is set by statute and it moves, so read the solicitation in front of you instead of trusting what was true on the last one. The rest of that process is in our honest first look at bidding public works.
Capacity is the part people start too late. A surety underwrites your company rather than the job, so expect questions about financial statements, work already under contract, your banking relationship, and a personal indemnity agreement from the owners. That takes weeks. Open the file with an agent while you are still bidding private work, and ask what your capacity would be today and what would raise it. Then bid the small public job first, because one completed bonded contract is what makes the larger one available.
What we do in our own companies
We run painting and flooring companies in Bellingham along with the licensed Washington general contractor they operate under, so we carry all of this and get asked for proof constantly. The bond, the certificates, and every renewal date live in one folder with the dates on a calendar, so a request gets answered the same hour and nothing quietly expires while we are busy.
When a bid looks like it will need an endorsement or a bond, we start that at bid time instead of at award. Waiting for the contract to arrive is how a job you already won turns into two weeks of nothing happening. Most of this is filing rather than skill, and it sits in the same workflow as the estimating and the follow-up.
Bond amounts, insurance minimums, and public works bonding rules differ by state and change over time. This article describes Washington requirements as we understand them as of the date shown, and it is not legal, tax, or insurance advice. Confirm current figures with the Washington State Department of Labor and Industries, your surety agent, or an attorney before you rely on them.
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