In order for a company to acquire a license in Arizona, one of the demands by the ROC (Registrar of Contractors) is that the company MUST have a bond and that bond must always be current. If the company is licensed to do commercial work, as well as residential work, then TWO bonds are required.

The purpose of the bond, I was told by the agent of the bonding company, is to assure that the SUPPLIER will be paid. If the consumer pays the contractor for the materials, and if the contractor defaults in paying for the materials (as may be the case should the materials be bought "on account" and the Contractor "skips town" or "goes under") then at least the supplier would be compensated for the goods sold up to the amount of the bond.

This would be different than the Recovery Fund, which is a fund set up by the ROC so that when a job is deemed unacceptable to the consumer and then the ROC as well, AND the Contractor either is unwilling or unable to bring the job up to industry standards, the Recovery Fund is intended to compensate the consumer.