Surety Bonds

Insurance protects your business from covered losses. A surety bond protects the party requiring the bond: if you fail to meet a bonded obligation, the surety pays the claim and then looks to your business for reimbursement. Bonds are underwritten more like credit than like insurance.

The most common are bid bonds (required to submit bids), performance bonds (backing completion of the work), payment bonds (backing payment to subcontractors and suppliers), and license bonds (required by states or cities to hold a contractor license). Requirements vary by project and jurisdiction.

Bond premiums are typically a small percentage of the bond amount, and the percentage often depends on your financials, credit, experience, and the size of the obligation. Stronger financials generally mean lower percentages. License bonds are often inexpensive, while large performance bonds involve deeper underwriting.

Sometimes. Some surety programs work with newer businesses or owners with limited credit, though pricing may be higher and bond amounts may be smaller. Building a relationship with a surety and completing bonded work successfully often expands capacity over time.

License bonds are often issued quickly, sometimes the same day, since underwriting is light. Bid and performance bonds take longer because the surety reviews financials, experience, and the project itself. If you know bonded work is coming, setting up a surety relationship before you need the bond typically speeds things up.

License and permit bonds typically renew annually as long as you hold the license. Bid, performance, and payment bonds are tied to specific projects and end when the obligation is fulfilled. Renewal pricing may change with your financials and claims history.