A surety bond helps bring peace of mind, guaranteed.

Surety bonds and commercial bonds for North Carolina, Tennessee, and Virginia businesses.

If your business has been told it needs to be bonded—by a licensing board, a project owner, a court, or the DMV—you’re in the right place. As a local, independent insurance agency in Garner, NC, we help contractors, auto dealers, and business owners across North Carolina and Tennessee get the surety bonds and commercial bonds they need, at competitive rates, from carriers we know and trust.

What is a surety bond and how does it work?

A surety bond is a three-party agreement that guarantees an obligation will be fulfilled. The three parties are the principal (the business or person required to get the bond), the obligee (the government agency, project owner, or client requiring it), and the surety (the insurance company backing the guarantee).

Here’s how it works in practice. Imagine a contractor is building a new office for a government agency. The agency wants a guarantee that taxpayers won’t be left paying out of pocket if the contractor fails to deliver. So the contractor (the principal) pays a premium to purchase a surety bond, and the surety pays compensation to the agency (the obligee) if the contractor doesn’t perform. Unlike ordinary insurance, the surety can and will recover that money from the contractor — the bond exists so the obligee never has to chase it themselves.

What types of surety and commercial bonds are there?

Surety bonds fall into two broad categories: contract surety bonds (bid, performance, and payment bonds tied to construction and service contracts) and commercial surety bonds (license, permit, court, and public official bonds required by government agencies). Here are the types we can help you obtain:

The difference between the principal and the obligee.

While government agencies commonly insist on a bond, it can work with any two organizations. The one that purchases the bond is the principal, while the one that gets any payout is the obligee. If the principal fails to perform the work they are bound to complete, the obligee is compensated for financial loss or may be able to get another contractor to complete the project.

If there’s anything else you need to know about surety bonds, contact us to learn more.

What’s the difference between being bonded and being insured?

Being bonded is different from being insured. Insurance protects your business from losses; a surety bond protects the other party — your customer, a government agency, or a project owner — if your business fails to meet its obligations. Your business insurance pays claims and absorbs the loss. With a bond, the surety pays the obligee and then looks to you for repayment. Many businesses need both: insurance to protect themselves, and bonds to satisfy licensing or contract requirements.

Who needs a surety bond in North Carolina?

Surety bonds are required across many industries in North Carolina and Tennessee, most often to obtain a license, win a contract, or satisfy a court or state agency. Common examples include:

• General contractors — the NC Licensing Board for General Contractors allows applicants to post a surety bond in lieu of meeting working capital requirements (vc_column_text75,000 for a limited license, $500,000 for intermediate, vc_column_text,000,000 for unlimited)

• Auto dealers — North Carolina requires motor vehicle dealers to carry a $50,000 surety bond, with additional bonds for additional locations

• Vehicle owners with lost or missing titles — the NCDMV requires a lost title bond (bonded title) equal to 1.5 times the vehicle’s appraised value

• Freight brokers, mortgage professionals, collection agencies, and public adjusters — bonded as a condition of state or federal licensing

• Public officials and fiduciaries — including executors, guardians, and estate administrators through probate and court bonds

Bond amounts and requirements change, and different jurisdictions set their own rules — right down to the city or county. If you’re not sure which bond you need, contact us and we’ll help you find the requirements that apply to your work.

License bonds are required of many businesses.

Many local, state, and federal government agencies require businesses to obtain license bonds — also known as permit bonds — before they can receive a license or permit for their industry. For example, if you run an auto dealership in North Carolina, you must purchase an auto dealer bond before you can begin selling or trading vehicles. License bonds protect consumers from fraud or other harm caused by the bonded business. It’s essentially a guarantee that a business will adhere to the governmental regulations required of its industry.

Bid bonds for contractors and construction.

Bid bonds are used primarily by contractors and construction businesses. Project developers often require contractors bidding on a project to purchase a bid bond to protect their interests. Bid bonds guarantee that contractors are financially sound enough to complete the project and that the bids they place are serious and competitive — protecting developers from lowball bids that get raised mid-project or abandoned entirely.

Performance bonds are the follow-up to bid bonds.

You’ve gotten your bid bond, placed your bid, and won the project. Now the developer will likely require a performance bond to protect the investment they’ve made. A performance bond guarantees that you as the contractor will complete the project as agreed in the contract. Rates depend on a number of factors, including the bid amount and your track record on past jobs. On public projects, performance bonds are typically paired with payment bonds, which guarantee that subcontractors and suppliers get paid.

Lost instrument bonds help everyone get the money they need.

You’ve received a cashier’s check, a money order, or a stock certificate — and now you can’t find it. Financial institutions will often require a lost instrument bond before issuing a replacement. These bonds guarantee that if the original is ever found, you won’t be able to cash both it and the duplicate, protecting the institution from paying twice. Fixed penalty bonds cover instruments of fixed value, like checks; open penalty bonds cover instruments whose value fluctuates, like stock certificates. (The NCDMV’s lost title bond works on the same principle for vehicle titles.)

Why work with a local independent agency for your surety bonds?

Most of the surety bond websites you’ll find online are national call centers. Bailey Insurance Agency is a local independent agency with a real office in Garner, NC, serving businesses across North Carolina and Tennessee for over a decade. That means an agent who knows North Carolina’s bonding requirements, shops multiple surety carriers for your best rate, and answers the phone when your licensing deadline is tomorrow. And because bonds often go hand in hand with business insurance, we can review your whole picture — general liability, business auto, workers’ comp — in one conversation.

If you’re looking to learn more about surety bonds and their requirements, reach out and one of our agents will walk you through the process.