Nebraska Construction Bonds

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Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs.


What Are Nebraska Construction Bonds?

Nebraska construction bonds are surety bonds that help ensure contractors working in Nebraska comply fully with applicable construction laws and regulations. Construction bonds provide recourse for project owners and the public when violations cause financial harm to occur. When losses result from regulatory and/or contractual violations, the injured party can file a claim for monetary damages.

What Nebraska Construction Bonds May Be Needed?

Some commonly required construction bonds in Nebraska are:

  • Bid bonds
  • Performance bonds
  • Payment bonds

Construction bonds may be required by state and/or local contractor licensing bodies and by public or private project owners, particularly for larger projects.

Other Nebraska construction bonds that project owners may require include:

  • Contractor license bonds (local only)
  • Maintenance bonds
  • Subdivision improvement bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Do Nebraska Construction Bonds Work?

Every construction bond is a legally binding contract that brings together three parties known as the obligee, the principal, and the surety.

  • The party requiring the contractor to furnish the bond is the “obligee,”
  • The contractor purchasing the bond is the “principal,” and
  • The bond’s guarantor is the “surety.”

While the principal is legally obligated to pay valid claims, the surety guarantees their payment. The surety honors its guarantee by paying the claimant directly. The funds used for that payment are from a credit line established for the principal when the bond is purchased. The principal must repay the resulting debt, or the surety is likely to take legal action to recover the funds.

How Much Do They Cost?

The annual premium cost for a construction bond is determined by multiplying the required bond amount by the premium rate, which is assigned by the surety through and underwriting risk assessment.

The risk of the surety not being repaid for claims paid on the principal’s behalf is measured largely on the basis of the principal’s personal credit score. A high credit score means the principal presents a low risk to the surety, resulting in a low premium rate. A low credit score is a reliable indication of greater risk, which warrants a higher premium rate.

A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.

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