While a number of states require that contractors be bonded, it should be noted that most home remodeling is accomplished without any kind of bond. The reason is that bonds are expensive and are only given to contractors who meet very stringent requirements. Further, both contractors and homeowners have found that bonds are not always necessary to accomplish a successful remodeling project.

License and permit bonds guarantee fulfillment of local or state requirements by the contractor in order to obtain a license or permit. The kind of bonds appropriate for home remodeling and additions are contract bonds, in which the surety (usually an insurance company) guarantees to the homeowner that the contractor will complete the work to a given industry standard of quality and that the contractor will pay all suppliers, subcontractors and workers on the job.

The bond is called a contract bond because it guarantees that the contractor will fulfill the terms and requirements of a specific contract. Some homeowners also purchase a payment bond for a remodeling project guaranteeing that s/he will pay the contractor the entire price stated in the contract for the work performed.