Nevada 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 Nevada 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 Nevada Construction Bond?

Nevada construction bonds protect project owners against financial losses caused by the unlawful or noncompliant actions of the contractors they hire. Construction bonds do this by requiring contractors to:

  • Operate in accordance with regulatory and contractual obligations, and
  • Compensate project owners for monetary damages caused by contractor violation(s).

What Types of Nevada Construction Bonds May Be Needed?

All Nevada contractors must be licensed at the state level. Purchasing a contractor license bond is a prerequisite for obtaining a license.

Nevada’s “Little Miller Act” requires that both performance bonds and payment bonds be furnished by contractors before they can be awarded a public works or other state-funded project valued above a given dollar threshold. Although private construction projects don’t fall under the Little Miller Act., private project owners can also require performance and payment bonds from their chosen contractors. And both private and construction project owners may choose to require a bid bond from each contractor bidding on a job.

Other construction bonds that contractors operating in Nevada may need include:

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

How Does a Nevada Construction Bond Work?

The three parties to any construction bond are referred to as the:

  • obligee—the project owner,
  • principal—the contractor, and
  • surety—the bond’s guarantor.

An obligee that has experienced a financial loss because of a contractor’s default or other violation can file a claim against the applicable bond. And if the surety finds the claim to be valid, the principal is legally obligated to pay it. 

However, in guaranteeing the bond, the surety agreed to extend credit to the principal to make sure the claim is resolved. Therefore, the surety will make the payment directly to the claimant and then be repaid by the principal. A principal who does not repay the debt in accordance with the surety’s credit terms, the surety will almost certainly sue the principal to recover the funds.

How Much Does It Cost?

The annual premium for most types of construction bonds is determined through underwriting. The underwriting goal is to assess the risk a bond applicant could present to the surety—specifically the risk of the surety not being repaid for claims paid on the principal’s behalf. The applicant’s personal credit score is the accepted measure of that risk and the key factor in setting the premium rate.

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 Nevada 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 Nevada Construction Bond?

Nevada construction bonds protect project owners against financial losses caused by the unlawful or noncompliant actions of the contractors they hire. Construction bonds do this by requiring contractors to:

  • Operate in accordance with regulatory and contractual obligations, and
  • Compensate project owners for monetary damages caused by contractor violation(s).

All Nevada contractors must be licensed at the state level. Purchasing a contractor license bond is a prerequisite for obtaining a license.

Nevada’s “Little Miller Act” requires that both performance bonds and payment bonds be furnished by contractors before they can be awarded a public works or other state-funded project valued above a given dollar threshold. Although private construction projects don’t fall under the Little Miller Act., private project owners can also require performance and payment bonds from their chosen contractors. And both private and construction project owners may choose to require a bid bond from each contractor bidding on a job.

Other construction bonds that contractors operating in Nevada 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 referred to as the:

  • obligee—the project owner,
  • principal—the contractor, and
  • surety—the bond’s guarantor.

An obligee that has experienced a financial loss because of a contractor’s default or other violation can file a claim against the applicable bond. And if the surety finds the claim to be valid, the principal is legally obligated to pay it. 

However, in guaranteeing the bond, the surety agreed to extend credit to the principal to make sure the claim is resolved. Therefore, the surety will make the payment directly to the claimant and then be repaid by the principal. A principal who does not repay the debt in accordance with the surety’s credit terms, the surety will almost certainly sue the principal to recover the funds.

The annual premium for most types of construction bonds is determined through underwriting. The underwriting goal is to assess the risk a bond applicant could present to the surety—specifically the risk of the surety not being repaid for claims paid on the principal’s behalf. The applicant’s personal credit score is the accepted measure of that risk and the key factor in setting the premium rate.

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 Nevada construction bond.