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Texas Department of Insurance
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Home building or renovation worries? Ask your contractor to buy a surety bond.


Building or renovating a house can be exciting and expensive. And you might be nervous thinking about everything that could go wrong. Asking your contractor to buy a surety bond could give you peace of mind.

  1. How do you get a surety bond?

    If your contractor doesn’t offer a surety bond, you can ask them to buy one from an insurance company that sells them. Your contractor will likely pass the cost along to you.

    Ask your contractor about a surety bond early because it can take a couple of weeks for them to get one. The insurance company will want to check out your contractor before agreeing to sell them a surety bond.

  2. How do they work?

    If part of your project isn’t done according to the contract you signed with your contractor, the insurance company that sold the surety bond will pay up to the bond’s limits to complete the project.

    There are two common types of bonds:

    • Performance bonds pay if a contractor doesn’t do the work outlined in the contract. An example might be a contractor who walks off the job and isn’t returning your phone calls.
    • Payment bonds (also called labor or material bonds) pay subcontractors and material suppliers if your contractor doesn’t pay them.

    Bonds only pay to complete or fix what was in your contract. So be sure you know what’s in the contract and that it meets your needs.

    Note: Don’t forget you’ll need home insurance if you’re building a new house. If you renovated, talk to your home insurance company about getting more coverage if the price to replace your house went up.



Questions? Call us at 800-252-3439.

Last updated: 4/20/2023