Surety Bonds
Also known as Surety, contractor bonds, license and permit bonds, bid / performance / payment bonds, contract bonds
Getting licensed, pulling a permit, or bidding a job starts with getting bonded. We make that the fast part.
A surety bond is a three-party guarantee. You are the principal, the agency or project owner requiring the bond is the obligee, and the surety company stands behind your promise to meet an obligation, whether that is following the rules of your license or finishing a project you were hired to build. If you fall short, the surety pays the obligee up to the bond amount, and then you repay the surety. Businesses need bonds to get licensed, pull permits, and bid work, often before they have bought any other coverage. We place them across Nevada, California, and ten more states, with many commercial bonds issued the same day and a specialist on hand for contract bonds.
Reviewed for accuracy by Mark Hutchings, Licensed Insurance Producer (NV #3600994, CA #6003400).
Who needs Surety Bonds?
- Contractors getting or renewing a license, since the Nevada State Contractors Board and California's CSLB both require a contractor's bond before they will issue your license.
- Businesses pulling permits with a city, county, or state agency that requires a permit or performance bond to break ground.
- Contractors bidding public or larger private projects, where the owner requires a bid bond to bid and performance and payment bonds to build.
- Auto dealers, freight brokers, and notaries, whose state licenses come with their own required bonds.
- Anyone appointed by a court or handling other people's money, including probate, guardianship, and fiduciary bonds.
- Restaurants, bars, retailers, and other businesses that collect sales tax and have to post a sales tax bond with the state.
What it covers
- Contractor license bonds, the license bond the Nevada State Contractors Board and California's CSLB require, sized to your license limit.
- License and permit bonds, for trade licenses, business permits, and regulatory requirements across the states we serve.
- Bid, performance, and payment bonds, the contract surety that lets you bid and then deliver public and larger private projects.
- Sales tax bonds, to satisfy a Nevada Department of Taxation security deposit without tying up your cash with the state.
- Court and fiduciary bonds, including probate, guardianship, and appeal bonds a court requires.
- Notary, auto dealer, freight broker, and other commercial bonds tied to a specific license or permit.
What it doesn’t cover
- Lawsuits and injury claims brought against you by customers or the public, which is general liability insurance.
- Injuries to your own employees, which is workers' compensation.
- Damage to your building, equipment, or inventory, which is commercial property insurance.
- Accidents involving vehicles you use for the business, which is commercial auto insurance.
- Theft or fraud committed against your business by an employee, which is commercial crime insurance, sometimes called a fidelity bond.
- A surety bond does not protect your business at all. It protects the party that required it. It is a guarantee, not insurance for you.
Real claim scenarios
Getting licensed in Reno
A Reno contractor sets up a new company and is ready to take on work, but the Nevada State Contractors Board will not issue the license until a contractor's license bond is in place. We place the bond the same day, the license clears, and the crew starts the job that week instead of sitting idle waiting on paperwork.
Winning the public bid
A Northern Nevada contractor wants to bid a municipal project. The invitation to bid requires a bid bond just to submit, and the winning bidder has to post performance and payment bonds before starting. We arrange the surety credit ahead of time so the contractor can bid with confidence and bond the award without scrambling.
A claim against the bond
A property owner alleges a licensed contractor left work unfinished and out of code, and files a claim against the contractor's license bond. The surety investigates and pays the valid portion to the owner, up to the bond amount, because the bond exists to protect that owner. The contractor then reimburses the surety under the indemnity agreement they signed. This is the part that surprises people: a bond protects the other party, and you stand behind it.
Scenarios are illustrative; actual coverage depends on your policy terms.
How it’s priced
A surety bond is not priced like insurance, and you do not pay the full bond amount. You pay a premium that is a small percentage of it, and for most commercial bonds that percentage is low. Simple license, permit, and notary bonds are often issued instantly for a flat fee or a small rate on the bond amount. Contract bonds, meaning bid, performance, and payment bonds, are underwritten on your financials, your experience, and the specific job, so they get a closer look and are usually priced as a percentage of the contract. The single biggest driver of your rate is credit. Strong personal and business credit earns the best rates, while weaker credit raises the rate or, in some cases, calls for collateral. Figures here are illustrative, not a quote.
- The bond amount the obligee requires, since your premium is a percentage of that amount, not the full sum.
- The type of bond, since a standard commercial bond costs far less to place than an underwritten contract bond.
- Your personal and business credit, the single largest factor for most bonds.
- Your financial statements and work history, for contract bonds that require underwriting.
- The size and nature of the specific project, for bid, performance, and payment bonds.
- The state and the obligee's exact bond form and requirements.
What to watch out for
- A bond is not insurance for you. It protects the party that required it, and if the surety pays a claim, you are obligated to pay the surety back. That reimbursement duty is called indemnity.
- A license bond does not replace your liability insurance. You still need general liability and workers' compensation to protect your own business.
- Letting a required bond lapse can suspend your license or permit, so renew on time.
- Weak credit can raise your rate or require collateral, so it helps to know where you stand before you apply.
- Contract bonds take underwriting time. Line up your bonding before bid day, not the morning of.
- The bond form has to match exactly what the obligee requires. The wrong form can get a bid rejected or a permit held up.
Surety Bonds FAQs
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