"Are you bonded and insured?" gets asked as one question so often that the two get treated as interchangeable. They're not. Insurance protects against accidents and liability. A bond protects against the subcontractor not finishing the job, or not paying their own suppliers and lower-tier subs. Knowing the difference changes what you actually ask for.
What a bond actually is
A surety bond is a three-party agreement: the subcontractor (principal), a surety company, and you (the obligee). If the sub fails to perform — walks off the job, does defective work, or fails to pay lower-tier subs and suppliers — the bond provides a financial remedy up to the bond amount. Unlike insurance, the surety typically expects to be repaid by the sub afterward; it's a guarantee of performance, not a shared-risk pool.
The two common types on subcontractor work
- Performance bond — guarantees the sub completes the work per the contract terms
- Payment bond — guarantees the sub pays their own suppliers and lower-tier subs, protecting you from mechanic’s liens filed against your project
When to actually require one
Bonding isn't standard on every subcontract — it adds cost and, on very small jobs, can be disproportionate to the risk. It's most commonly required on public/government projects (often by law), larger private commercial or development projects, and any job where a sub's failure to perform would have serious schedule or financial consequences for you.
Even on jobs where you don't require a bond outright, asking whether a sub *can* get bonded — and at what capacity — is a useful underwriting signal borrowed for free. Bonding companies vet financials and track record before issuing a bond, so bondability itself tells you something about the business.
Bonding vs. insurance, side by side
- Insurance covers accidents, injuries, and property damage — a risk-sharing pool
- Bonding covers non-performance and non-payment — a guarantee backed by the surety, who expects repayment from the sub
- Both are typically required together on larger or public projects, not as substitutes for each other
How to check bonding status before you hire
Ask directly whether the sub currently holds bonding capacity and at what limit, and confirm with their surety or agent rather than taking a verbal answer. Every subcontractor listed on Sub-Finder discloses their bondable status as part of the verification application, alongside license and insurance documentation, so it's visible on the profile before you ever reach out.