Running the Business · Module 1
The $25,000 bond: what it protects, what it does not, and how it quietly disappears
Every California contractor license needs a $25,000 contractor's bond on file, and many need a second $25,000 bond for the person who qualifies the license. The bond is not insurance for you. It pays the homeowner, the employee, or the state when you break license law, and then the surety comes to you for the money. It is one pool for every job you do, not $25,000 per job, and it can be drained. This lesson covers who can claim against it, what happens the day your surety cancels, the extra $100,000 bond and $1,000,000 insurance policy an LLC must carry, and the cashier's-check alternative that ties up your money for three years.
What the full lesson covers
- The contractor's bond is $25,000 (raised from $15,000 on January 1, 2023). A second $25,000 bond of qualifying individual is required when the qualifier is an RME, or an RMO who owns less than 10 percent of the company.
- The bond protects homeowners, unpaid employees, and anyone defrauded by you. It does not protect you. When the surety pays a claim, you owe the surety.
- $25,000 is the total available across every job for the life of the bond. Claims reduce it, and once it is depleted you must buy a new one to keep the license.
- A cancelled bond suspends the license 30 days after CSLB receives the surety's notice. Working during a bond suspension is unlicensed contracting.
Unlock the full lesson
This is the public summary. The full lesson has the method, the worked cases, the checklists and the templates:
- All in-depth lessons, exam prep and After the License
- 1,200+ practice questions
- AI tutor (100 messages included)
- 18+ hours of audio lessons
- Full-length practice exams
- Pass guarantee
More lessons in From Pass Letter to License Number
- 1What happens after you pass: the 90-day clock and the six things CSLB needs
- 2The $25,000 bond: what it protects, what it does not, and how it quietly disappearsYou are here
- 3Workers' compensation: what a C-36 must carry today, and what changes in 2027 and 2028
- 4Who qualifies the license: sole owner, RMO, RME, and why lending your license ends careers
- 5Your business name: what CSLB allows, the fictitious business name filing, and the 90-day rule for changes