Nebraska Construction Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Nebraska construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

What Is a Nebraska Construction Bond?

Nebraska construction bonds help maintain the integrity of the construction industry by holding contractors to exacting standards and protecting project owners against financial loss when a contractor violates regulatory or contractual requirements. The terms of a construction bond require the contractor (the bond’s “principal”) to compensate the project owner (the bond’s “obligee”) or other injured party who has a valid claim for monetary damages.

What Types of Nebraska Construction Bonds May Be Needed?

Nebraska licenses contractors at the state level, but no bond is required as a prerequisite for licensing. However, municipal or county authorities that have their own licensing process may require a contractor license bond. 

Nebraska’s “Little Miller Act” requires performance bonds and payment bonds from contractors before they can be awarded a state-funded construction project above a certain threshold value. While privately funded construction projects aren’t covered by the Little Miller Act, many private project owners do require performance and payment bonds for their own protection, particularly for larger contracts. When contracts, public or private, are awarded through competitive bidding, any project owner can require a bid bond from each bidder.

Other construction bonds that a contractor operating in Nebraska may need include:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Does a Nebraska Construction Bond Work?

The three parties to any construction bond are:

  • The project owner (known as the “obligee”),
  • The contractor (called the “principal”), and 
  • The bond’s guarantor (the “surety”).

The legal obligation to pay valid claims belongs entirely to the principal. But the surety guarantees their payment by agreeing to extend credit to the principal for that purpose. 

The normal process is for the surety to pay a valid claim initially and the principal to repay the surety in accordance with the agreed-upon credit terms. Not repaying the surety typically results in the principal being sued to recover the funds.

How Much Does It Cost?

The annual premium for a Nebraska construction bond is determined by multiplying the bond amount by the premium rate. The premium rate is based largely on the principal’s creditworthiness as measured by their personal credit score. That’s because of the risk of the surety not being repaid for claims paid on the principal’s behalf. 

A high credit score means the principal is financially responsible, so the risk to the surety is low. And low risk merits a low premium rate. On the other hand, a low credit score is a warning sign for higher risk, so the premium rate will be higher as well. 

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Nebraska construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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FREE CONSTRUCTION BOND QUOTE

What Is a Nebraska Construction Bond?

Nebraska construction bonds help maintain the integrity of the construction industry by holding contractors to exacting standards and protecting project owners against financial loss when a contractor violates regulatory or contractual requirements. The terms of a construction bond require the contractor (the bond’s “principal”) to compensate the project owner (the bond’s “obligee”) or other injured party who has a valid claim for monetary damages.

 

Nebraska licenses contractors at the state level, but no bond is required as a prerequisite for licensing. However, municipal or county authorities that have their own licensing process may require a contractor license bond. 

Nebraska’s “Little Miller Act” requires performance bonds and payment bonds from contractors before they can be awarded a state-funded construction project above a certain threshold value. While privately funded construction projects aren’t covered by the Little Miller Act, many private project owners do require performance and payment bonds for their own protection, particularly for larger contracts. When contracts, public or private, are awarded through competitive bidding, any project owner can require a bid bond from each bidder.

Other construction bonds that a contractor operating in Nebraska may need include:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds

The three parties to any construction bond are:

  • The project owner (known as the “obligee”),
  • The contractor (called the “principal”), and 
  • The bond’s guarantor (the “surety”).

The legal obligation to pay valid claims belongs entirely to the principal. But the surety guarantees their payment by agreeing to extend credit to the principal for that purpose. 

The normal process is for the surety to pay a valid claim initially and the principal to repay the surety in accordance with the agreed-upon credit terms. Not repaying the surety typically results in the principal being sued to recover the funds.

The annual premium for a Nebraska construction bond is determined by multiplying the bond amount by the premium rate. The premium rate is based largely on the principal’s creditworthiness as measured by their personal credit score. That’s because of the risk of the surety not being repaid for claims paid on the principal’s behalf. 

A high credit score means the principal is financially responsible, so the risk to the surety is low. And low risk merits a low premium rate. On the other hand, a low credit score is a warning sign for higher risk, so the premium rate will be higher as well. 

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

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Request a quote online or call today to speak with one of our surety bond experts about obtaining a Nebraska construction bond.