The 7 Surety Bonds Every Contractor Needs to Know (And When You'll Actually Need Each One)
Most contractors meet their first surety bond the week they pay a license fee — long before they ever see a blueprint, a bid room, or a public-works spec book. The last bond they meet shows up a year after the punch list is closed, when a sidewalk cracks and the city pulls out the warranty clause. In between, there are five more. Here are all seven surety bonds for contractors, ordered the way you'll actually run into them over a career.
This is not a taxonomy. It's a timeline. If you already understand how the three-party surety guarantee actually works, skip the theory and scroll. If you're trying to pick between a license bond and a job-specific bond for a specific project, the better read is our guide on deciding between a license bond and contract bonds. This post is for the contractor who wants the whole field mapped in one sitting.
Every dollar figure below is pulled from a government source and cited inline. Where a number depends on the state, we show you the state rule and the effective date.
1. Contractor License Bond — The One You Buy Before You Bid Anything
A contractor license bond is a condition of getting (and keeping) your state or local contractor's license. It protects the public and the licensing agency against statute violations, unfinished residential work, and unpaid subs or suppliers depending on the state.
There is no federal license bond. Every state writes its own rules, which means the amount you post depends entirely on where your license hangs. A few real numbers from state code:
- California: $25,000 per Bus. & Prof. Code § 7071.6, raised to that amount on January 1, 2023 via SB 607 (CSLB bond requirements).
- Washington: $30,000 for general contractors, $15,000 for specialty, per RCW 18.27.040. Those amounts took effect July 1, 2024 — a 150% jump from the old $12,000/$6,000.
- Florida: $20,000 for Division I, $10,000 for Division II (Rule 61G4-15.006 F.A.C.).
- Texas: no statewide GC license bond, only municipal and specialty trade bonds. If you contract in Houston or Dallas, the bond comes from the city, not the state.
We track every state's requirement on the contractor license bond requirements hub, plus dedicated state pages for Arizona, Colorado, Georgia, Illinois, Nevada, New York, North Carolina, Tennessee, and Washington. For a fast price estimate without filling out a full application, try the contractor license bond calculator or read through the license bond cost breakdown.
Trade-specific examples are worth bookmarking too — our electrical contractor bonds, plumbing contractor bonds, HVAC contractor bonds, and mechanical contractor bonds pages all spell out the specific trade thresholds.
2. Bid Bond — The One You Buy the Morning of the Bid
Once your license is live, the next bond a contractor meets is the bid bond. It's the obligee's way of saying “if you win this job and walk away, you'll pay the difference between your bid and the next lowest bid.” It shows up the first time a contractor chases public work.
On federal jobs, FAR 28.101 sets the bid bond floor at 20% of the bid price, capped at $3 million. Most private-market bid bonds run 5%-10% of the bid because that's what private owners ask for — but if you see a competitor blog quoting 5% on a federal job, they're wrong. The FAR number is 20%.
There's a quirk in the bid bond rules worth knowing up front: under FAR, a bid bond can't be required in isolation. It only shows up when a performance and payment bond are also required on the award. Useful corollary — sureties typically issue bid bonds at no separate charge when you're planning to buy the performance bond through them anyway.
We break down thresholds, amounts, and common mistakes in the bid bond requirements guide.
3. Performance Bond — The One the Owner Cashes If You Walk
Win the bid, and the performance bond is the next one you sign. It guarantees you'll finish the contract in accordance with the spec. If you default, the owner can demand the surety either fund a completion contractor or pay damages up to the bond penalty.
On federal projects, FAR 28.102-2 sets the performance bond amount at 100% of the original contract price. Not 50, not 75 — 100, and it stays there as change orders push the number up. On private work the number is negotiable but 100% is the industry default.
Premium rate for a well-qualified contractor is typically 0.5% to 3% of the contract amount, tiered by contract size and credit. For a $1 million contract, that's $5,000 to $30,000 — a number worth building into the bid at the estimating stage, not discovering at award.
The performance bond requirements guide walks through the qualifying underwriting and how the surety will look at your work-on-hand, working capital, and bonding history.
4. Payment Bond — The One Your Subs and Suppliers Call If You Don't Pay
The payment bond is the quiet twin of the performance bond. Same penalty amount, different beneficiary. The performance bond protects the owner. The payment bond protects labor, subcontractors, and material suppliers — the people who would otherwise file a mechanic's lien if they weren't paid.
Federal projects are lien-proof. You can't put a lien on a courthouse or a military base, so the Miller Act substitutes a payment bond for lien rights. Under FAR 28.102-2, the payment bond is also 100% of the contract price and must be no smaller than the performance bond.
The same logic applies at the state level through Little Miller Acts. Texas Gov Code § 2253 kicks in on public works over $25,000. California Civ Code § 9550 uses the same $25,000 threshold. Washington starts at $35,000. Florida runs through F.S. § 337.18 at the state DOT level. The trigger varies, the principle doesn't: public job, unpaid sub, the payment bond writes the check.
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Get a Free Contract Bond Quote5. The Miller Act Performance & Payment Combo — The One Federal Rule Everyone Gets Wrong
Technically this is not a separate bond. It's the trigger. But the Miller Act is where the most expensive confusion happens in contractor surety, and it deserves its own spot in the list.
$100,000 vs. $150,000: Why You See Both Numbers
The Miller Act statute at 40 U.S.C. § 3131 says a performance and payment bond is required on federal construction contracts “exceeding $100,000.” But FAR 28.102-1 operationalizes federal bonding in three tiers, and the practical trigger for full performance-and-payment is $150,000, not $100,000. If you only remember one number, remember 150.
The three FAR tiers you will actually deal with on federal work:
- Under $35,000: no bonding required.
- $35,000 to $150,000: the contracting officer selects at least two alternative payment protections — payment bond, irrevocable letter of credit, tripartite escrow, or CDs. It's a choose-your-own-adventure zone.
- Over $150,000: full performance and payment bonds at 100% of the contract price.
One more federal-specific detail: the surety writing your bond has to appear on Treasury Circular 570. This is the annual list of federally approved sureties published by the Bureau of the Fiscal Service under 31 U.S.C. §§ 9304-9308. Each certified company has a per-bond underwriting limit, and anything above that limit has to be co-insured or reinsured. If your surety is not on the list, your bond is invalid on federal work. Period.
The Miller Act combo is the center of gravity for public-works contractors. We cover it in depth in the Miller Act bond requirements guide and on the main performance and payment bonds page.
And if your surety has declined a combo for a public job, ask about the SBA. The SBA Surety Bond Guarantee Program now backs bonds on contracts up to $9 million for non-federal work and $14 million for federal work — caps that rose from $6.5M and $10M effective March 18, 2024 (SBA announcement). SBA charges 0.6% of contract price for performance/payment bonds and nothing for bid bonds, and the QuickApp process streamlines contracts up to $500,000. It is the single most underused lever for emerging contractors.
6. Supply Bond — The Underdog Nobody Explains
You've got the contract. You're ready to order $400,000 in switchgear with a 16-week lead time. The owner says “we want a supply bond on the vendor.” Most contractors have never seen one before.
A supply bond guarantees that a supplier will deliver materials or equipment on time and per spec. It covers physical goods only — no labor component — which distinguishes it from a payment bond. It shows up on specialty materials, long lead-time equipment, and any commodity where price volatility could tempt a vendor to walk from the contract.
Here's the thing nobody mentions: the supply bond is not defined as a distinct category anywhere in 40 U.S.C. § 3131 or FAR Part 28 Subpart 28.1. FAR gives the “head of the contracting activity” discretion to require other bond types when circumstances justify them (FAR Part 28), and the supply bond lives in that discretionary space. Treat it as an industry convention, not a statutory mandate.
For a general contractor running a large mechanical package, the supply bond is the one you forget to price and then scramble to get issued two weeks before the PO cutoff. Budget for it on any job where a single vendor is more than 15% of the contract value.
7. Maintenance / Warranty Bond — The One That Outlives the Ribbon Cutting
You finished the job. Final payment is in. You take down the jobsite trailer. And then, 11 months later, a joint fails on the asphalt lift and the public works director pulls out the warranty clause. That's the maintenance bond.
A maintenance bond (sometimes called a warranty bond) guarantees defect repair during the post-completion warranty period. Duration is typically 12, 18, or 24 months, occasionally longer on infrastructure. The bond amount usually runs 10% to 20% of the contract value.
The cleanest statutory example is Florida Department of Transportation work. F.S. § 337.18 requires claimant actions to commence within 365 days of project completion. If a pothole opens up on day 366, the bond is off. If it opens on day 360, the contractor is repairing it. Six days of calendar math decide tens of thousands of dollars in liability.
Maintenance bonds are often bundled into the performance bond as a tail provision, so the line item isn't always obvious on the award letter. Ask your surety how post-completion coverage is structured before you sign — especially on DOT and municipal work, where warranty tails are the rule, not the exception. The hub page for construction bonds and the main contract bonds page both note where warranty periods typically attach.
How the Seven Stack on a Single Career
Here's the timeline, plainly:
- Year 1, day 1: license bond (kept renewed forever).
- Year 1 or 2, first public pursuit: bid bond on the first qualifying job.
- Award day: performance bond and payment bond issued as a pair.
- Award day (federal $150K+): Miller Act trigger activates; Treasury Circular 570 surety required.
- Procurement stage: supply bond if a vendor with long lead times or price risk is in the mix.
- Closeout, plus 12-24 months: maintenance bond tail.
A general contractor chasing mid-market public work will cycle through all seven in a year. A residential remodeler may only ever meet bond number one. A commercial contractor working private tenant improvements might deal with #1 continuously and #3/#4 on occasional larger jobs, and never see #5 or #7.
What separates contractors who thrive in surety from contractors who get stuck is simple: the thriving ones price bonds into the bid at estimating stage and treat the general contractor bond requirements (and trade-specific rules like the electrical contractor bond requirements) as part of job cost planning, not a last-minute procurement item. If you want the cleanest cost primer on the site, read the surety bond cost guide before your next bid cycle.
Frequently Asked Questions
Which of these 7 bonds will I need for my first contract?
Almost always a state contractor license bond first — $25,000 in California, $30,000 in Washington for GCs, $20,000 in Florida Division I. If your first contract is a public job, add a bid bond and then performance/payment bonds at award. A brand-new contractor doing private residential remodels may only carry the license bond for months before ever touching a contract bond.
Do I really need all 7 surety bonds at once?
No. The license bond is continuous — you renew it year after year. The project-specific bonds attach to individual jobs and release as the jobs close out. A typical GC with three public jobs in progress might carry one license bond and three active bond sets in parallel. You buy them as contracts require them, not as a standing subscription.
Which contractor bond is most commonly overlooked?
The supply bond. Because it's not formally defined in FAR Part 28 Subpart 28.1 the way performance and payment bonds are, contractors routinely forget to price it until a vendor with long lead times demands one at the PO stage. Maintenance bonds are a close second — they're buried in the warranty clause and get ignored until a defect claim appears in month 14.
What's the difference between the $100,000 and $150,000 Miller Act thresholds?
The statute at 40 U.S.C. § 3131 says bonds are required on federal construction exceeding $100,000. FAR 28.102-1 operationalizes that in three tiers: no bonds under $35,000, alternative payment protections between $35,000 and $150,000, and full performance plus payment bonds above $150,000. The practical trigger contractors encounter is $150,000, not $100,000. The difference between the statute and the FAR is the most common confusion on public-works contractor blogs.
Can the SBA help me get bonded if my surety says no?
Yes. The SBA Surety Bond Guarantee Program backs bonds on contracts up to $9 million non-federal and $14 million federal, with those caps effective March 18, 2024. SBA guarantees 80% of the surety's losses on most bonds, which often convinces a surety to say yes when they'd otherwise decline. The QuickApp process is available for contracts up to $500,000 and is the fastest way to get a small contractor into the program.
The Short Version
Seven bonds, one career. You start with the license bond before you touch a hammer. You encounter bid, performance, and payment bonds at your first public award. You meet the Miller Act the first time you chase federal work and learn the $150,000 FAR tier the hard way. You run into a supply bond the first time a vendor with long lead times enters the picture. And a year after the job closes, the maintenance bond reminds you the warranty clock is still ticking.
None of this is optional if you want to grow beyond residential remodels. The contractors who understand the sequence bid smarter, budget better, and don't lose awards because they forgot to price a bond line.
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All content is researched from official state and federal sources (.gov) and verified before publication. BuySuretyBonds.com works with Treasury-certified, A- minimum rated surety carriers serving all 50 states.