Surety bond
A financial guarantee a licensed contractor posts, through a surety company, that pays you (up to the bond amount) if they fail to finish the job or violate the contract.
A surety bond is a three-party promise: the contractor (the principal) buys it from a surety company, which guarantees to you (the obligee) that the work will be done per the contract — and pays out, up to the bond's face value, if it isn't. Most states that license general contractors require a bond as a condition of licensing, which is a big reason a [licensed](/glossary/certificate-of-insurance) contractor gives you more recourse than an unlicensed one. Don't confuse it with insurance: a bond protects *you*, and the surety company can come after the contractor to recover what it pays out, whereas liability insurance protects the contractor against accidental damage. The bond amount is usually modest next to a large remodel, so treat it as one layer of protection alongside [lien waivers](/glossary/lien-waiver) and a milestone payment schedule. See [how to find and vet a good contractor](/guides/how-to-find-and-vet-a-contractor).