L&I Insurance Requirements for Washington Contractors

Starting a contracting business in Washington? Before you can legally take a job, you have to register with the state — and to register, you need two things most new contractors don't fully understand: a contractor bond and general liability insurance.

Good news: it's simpler than it looks, and both of those are ours. This guide walks through what Washington actually requires, what a bond and general liability each do — they're different things, and neither is workers' comp — and how to get set up, often the same day.

What you actually need to operate legally

Every Washington contractor needs three things before taking on work:

• 1. Register with L&I. The state agency that handles contractor registration and workers' compensation. Registering is the umbrella — the bond and insurance below are part of it.
• 2. A contractor bond. $30,000 for general contractors, or $15,000 for specialty contractors. Required to register.
• 3. General liability insurance. At least $250,000 in coverage, with L&I named on the certificate. Also required to register — and your clients will want proof before they let you on site.

Miss any one and you can't legally work. The first two are the ones you actually buy — and the ones we set up for you.

L&I vs. a bond vs. insurance: what's the difference?

People mix these three up constantly. Here's the plain version:

• L&I is Washington's state fund for workers' compensation — coverage for your employees if they get hurt on the job. You can't buy workers' comp from a private company here. It comes only from L&I, which also runs contractor registration.
• A contractor bond protects your customers. If you don't finish a job, cause damage, or don't pay for materials, they can file a claim against your bond. It's required to register — but it's not insurance for you. More on that below.
• General liability insurance protects you and your business. If your work injures a member of the public or damages their property, general liability pays the claim. Washington requires at least $250,000 to register, and it's what a general contractor means when they ask for a "certificate of insurance."

Sort out all three and you're ready to work — legally, and covered.

Registering With L&I & Workers' Comp

L&I — the Washington State Department of Labor & Industries — runs contractor registration and the state's workers' compensation fund. You can't legally do construction work in Washington without registering first.

To register, you submit an application along with your bond, proof of general liability insurance, a workers' comp account, and the fee — $150.20. Signatures have to be notarized. You can walk it into a local L&I office and often finish the same day, or mail it in, which takes about 3-4 weeks. Some trades — electrical and plumbing especially — need additional licenses on top of registration.

The workers' comp part, briefly: Washington runs its own workers' comp fund, and you can't buy that coverage privately. If you have employees, it's mandatory — you'll open an account and report hours and pay premiums to L&I each quarter. If you're a solo operator with no employees, it's optional, but worth electing; get hurt without it and every medical bill is yours. That's the level of L&I detail most new contractors actually need. The two things you'll spend real effort getting right — because they're on you to buy — are the bond and the insurance. So let's break those down.

What a Contractor Bond Is — and Why L&I Requires One

The contractor bond is the most misunderstood part of getting set up — mostly because people assume it's insurance for them. It isn't.

A bond is a three-way guarantee. You buy it, a surety company backs it, and it protects your customers — plus anyone you owe for materials or labor. If you don't finish a job, do damage and won't make it right, or stiff a supplier, they can file a claim against your bond, and the surety pays them.

Here's the catch that trips people up: if the surety pays a claim, you have to pay the surety back. A bond guarantees your work to your customers; it doesn't protect you the way insurance does. That's the whole reason it's separate from your liability policy.

L&I sets the amounts, and they went up on July 1, 2024:

• General contractors: $30,000 bond
• Specialty contractors: $15,000 bond

You don't hand over the full amount. You pay an annual premium — a small fraction of the bond — often around $150/year for specialty contractors and $270/year for general contractors with reasonable credit.

Why L&I requires it: consumer protection. The bond gives a homeowner or client real recourse if a contractor disappears mid-job or does shoddy work, and it screens out operators who can't qualify for even a small surety. No bond, no registration.

We place contractor bonds for Washington trades every day — usually same-day, even with thin or bruised credit.

What General Liability Covers — and Why Everyone Asks for It

General liability is the insurance that protects you when your work affects someone else. It's built for the everyday risks of construction: a client trips over your extension cord, a dropped tool cracks a windshield, you nick a line and damage the house. GL covers the injury or property-damage claim, plus your legal defense.

Two reasons every Washington contractor needs it:

• The state requires it to register. As of 2024, Washington makes general liability part of contractor registration — at least $250,000 in coverage, with L&I named as the certificate holder. This changed recently, so a lot of older guides — and plenty of contractors — still think it's optional. It isn't.
• $250,000 is the floor, not the target. We recommend most contractors carry $1 million per occurrence / $2 million aggregate — and that's what most general contractors and project owners require anyway before they'll let you on site, usually via a certificate of insurance naming them as an additional insured. No certificate, no job.

What general liability does not cover matters just as much. It won't pay for your own injuries — that's L&I workers' comp. It won't replace your own tools — that's inland marine. And it won't cover fixing your own defective work. It's third-party protection.

For many trades, general liability starts around $64.99/month. We build the policy to match your trade and the limits your contracts demand — and we can issue the certificate the same day.

If You Hire Subcontractors

Hiring subs? Washington law makes you responsible for confirming each one is properly registered, bonded, and insured. Before a sub starts, check their status with L&I's contractor verification tool at lni.wa.gov. Hire an unregistered sub and you can be on the hook for their workers' comp claims, L&I penalties, and any damage they cause.

The safe move: collect a current registration, active bond, and general liability certificate from every sub before they set foot on the job. And it still matters even when your subs are insured — their coverage protects them, not you.

What Happens If You Skip a Step

L&I takes this seriously. Operating without registration runs up to $5,000 for a first offense and $10,000 after that, and they actively investigate on tips and complaints. Let your bond or insurance lapse and your registration gets suspended — which means you can't legally work until it's current. The theme is simple: keep all three active, all the time.

Common Questions From New Washington Contractors

Do I really need general liability insurance to register?

Yes. As of 2024, Washington requires contractors to carry general liability — at least $250,000, with L&I listed on the certificate — to register and to renew. Older guides that call it "optional" are out of date. On top of that, your clients will usually require higher limits before you can work for them.

What's the difference between my bond and my insurance?

Your bond protects your customers — if you don't finish or don't pay, they claim against it, and you repay the surety. Your general liability protects you — if your work hurts someone or damages their property, it pays the claim. You need both, and they do completely different jobs.

Do I need L&I if I have no employees?

You still register and open a workers' comp account, even solo. But you don't have to pay workers' comp premiums on yourself — that coverage is optional for owners, recommended but not required. The registration, bond, and general liability are required no matter what.

How much does it cost to get started?

Ballpark for a solo or small operation: the L&I registration fee is $150.20, a specialty bond runs around $150/year, a general bond around $270/year, and general liability starts around $64.99/month for many trades. Your exact numbers depend on your trade and revenue — get a quote and we'll price the bond and insurance together.

How SmartInsured Helps You Get Set Up

L&I handles the state side — registration and workers' comp. We handle the two pieces you actually buy: your contractor bond and your general liability insurance, plus commercial auto and the certificates your clients ask for.

We're a licensed Washington agency, and we work with contractors across the state every day. Tell us your trade, and we build coverage that fits how you actually work — then get you a bond and a certificate the same day when a job can't wait.

Three ways to get started:

• Start your quote — 4 minutes, structured form
• Quote with Dani — conversational intake if you'd rather walk through it
• Call 425-209-1206 — speak to a licensed Washington agent directly

Coverage starts at $64.99/month for general liability, and most policies can be bound the same day.

Related Reading

• Contractor Insurance in Washington: Complete Guide — the full coverage picture
• Washington General Contractor Bond Requirements — why a bond is not insurance
• Why General Contractors Need GL Even When Subs Are Insured — protecting yourself up and down the chain
• How Much Does Contractor Insurance Cost in Washington? — real pricing by trade and coverage
• What Is General Liability Insurance? — the coverage every contractor needs