Bonded, Licensed, and Insured. What’s the Difference?

Demolition contractors, and contractors of all kinds, will often tout that they are bonded, licensed, and insured. This happens so much, the words have started to become synonymous with each other. However, each term refers to a unique kind of protection offered to customers. Knowing the difference will help you understand what kind of risk you’re assuming when you hire a demolition contractor.


When a contractor is bonded, it means customers can file against the bond if they are unhappy with the work provided. Bonds act as an escrow of money that guarantees customers can get some money back if the contractor doesn’t hold up their end of the bargain. Some events that would usually be covered by a bond are:

  • Not finishing the project
  • Not paying for the proper permits
  • Failing to meet another financial obligation (paying subcontractors)


A state license lets you know that the contractor knows what they’re doing. Every state has their own process for issuing licenses, so make sure the contractor you hire is licensed in your state. We should note that a license is the most basic qualifying factor, so make sure to check their experience to verify their quality. Just because they’re licensed, doesn’t mean they’re good.


Probably the most obvious of the three, insured demolition contractors have a policy with an insurance company that covers them in case something goes wrong. Generally, contractors will have two types of insurance – liability and workers’ compensation. Liability covers property damages, lawsuits, and shields the customer from a lot of legal obligations. Workers’ comp will pay for job site injuries.