North Carolina 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 North Carolina Construction Bonds?

North Carolina construction bonds protect the state, project owners, and the public against the financial harm that can result from regulatory and contractual violations. They require contractors to operate in full compliance with all applicable laws and regulations. And when contract violations cause losses, the injured party can file a claim and be compensated for monetary damages.

What North Carolina Construction Bonds May Be Needed?

Some commonly required construction bonds in North Carolina are:

  • Bid bonds
  • Performance bonds
  • Payment bonds

These construction bonds may be required by state and/or local contractor licensing bodies or by public or private project owners.

Other North Carolina construction bonds that may be required include:

  • Contractor license bonds (for state and local contractor licenses)
  • Maintenance bonds
  • Subdivision improvement bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Do North Carolina Construction Bonds Work?

North Carolina construction bonds are legally binding on the three parties to the surety bond agreement: the obligee, the principal, and the surety.

  • The party requiring the purchase of a construction bond is the “obligee,”
  • The contractor purchasing the bond and legally obligated to pay valid claims is the “principal,” and
  • The party guaranteeing the payment of claims is the “surety.”

Although the principal is legally obligated to pay valid claims, the surety will extend credit to the principal for the purpose of paying claims. In practice, the surety will pay a claimant directly and be reimbursed by the principal. If the principal does not repay that debt, the surety can take legal action to recover the funds.

How Much Do They Cost?

To purchase a North Carolina construction bond, the principal will pay only a small percentage of the required bond amount. That percentage, the premium rate, is assigned by the surety through an underwriting assessment of the risk that the surety might not be repaid for claims paid on the principal’s behalf. The metric used in this assessment is the principal’s personal credit score.

A principal with a high personal credit score poses a low risk to the surety, so the premium rate will be low. A principal with a low credit score presents a greater risk, which calls for 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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