Surety Bonds
Types of Surety Bonds for Contractors
Types of Surety Bonds for Contractors — everything contractors need to know about surety bonds.
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Every Bond Type Explained — From License Bonds to Federal Project Bonds
Surety bonds are a required part of doing business for most licensed contractors. Whether you need a license bond to operate legally, a bid bond to compete for public projects, or a performance bond to secure a major contract — Trade Safe helps contractors get bonded fast at competitive rates.
License and Permit Bonds
The most common contractor bond. Required by most states and municipalities to obtain a contractor’s license. Protects consumers and licensing boards against contractor violations, fraud, or code violations. Typically $5,000–$25,000 bond amounts with very low premiums for contractors with good credit.
Performance Bonds
Guarantee that you’ll complete a project per the contract terms. If you default, the surety steps in — either completing the project, paying the owner to hire a completion contractor, or paying damages up to the bond amount. Required on virtually all public projects over certain thresholds and many large private contracts.
Payment Bonds
Guarantee that you’ll pay all subcontractors, material suppliers, and laborers on a project. Protects the project’s supply chain from non-payment. Almost always issued alongside performance bonds on public work. Required under the federal Miller Act and state Little Miller Acts.
Bid Bonds
Required with bids on public projects. Guarantees that if you’re the low bidder and awarded the contract, you’ll actually execute it and provide the required performance/payment bonds. If you refuse, the bid bond covers the cost of re-bidding to the next lowest bidder.
Maintenance and Warranty Bonds
Guarantee your work against defects for a specified period after project completion — typically 1–2 years. Sometimes required as a condition of final payment on public projects. Provides the owner a financial guarantee that defects discovered after completion will be remedied.