Surety Bonds in Connecticut
Contractor bonds in Connecticut: bid, performance, payment and license bonds
If a state agency, a town or a project owner has told you that you need a bond, you are in the right place. Most of the contractor bonds we place in Connecticut are for public bids and licensing, and most of the confusion we clear up is about bonds people think they need but do not. The Beam Agency places surety bonds for contractors and businesses across Connecticut, from small license and permit bonds that can be issued in a day to bid, performance and payment bonds for public and private construction.
What a surety bond is, and is not
A bond is not insurance for you. It is a guarantee, backed by a surety company, that you will do what you are legally or contractually obligated to do. Three parties are involved: you (the principal), the party requiring the bond (the obligee, usually a government agency or project owner), and the surety company. If you fail to perform, the obligee can claim against the bond. The surety pays the valid claim and then collects from you. That is why bonds are underwritten more like credit than like insurance, and why the premium is a small percentage of the bond amount rather than a flat rate. What is a surety bond and when do you need one in Connecticut?
Bonds we place
License and permit bonds
One myth first: Connecticut does not require a surety bond for Home Improvement Contractor registration. It requires general liability insurance of at least $20,000 and a $220 fee. If someone is selling you an “HIC bond,” ask what obligee is requiring it. More on HIC registration insurance.
Required by Connecticut agencies and municipalities as a condition of a license or permit. Common examples include motor vehicle dealer bonds, certain contractor and trade licenses, fuel dealers, and street opening or excavation permits issued by towns like Farmington, Avon and West Hartford. Most are small (a few thousand to $50,000), issued quickly, and renewed annually.
Contract bonds: bid, performance and payment
Connecticut requires a payment bond on public construction contracts over $100,000 (CGS § 49-41), and most public bids require a bid bond with the proposal. Private owners and general contractors increasingly require performance and payment bonds from subcontractors on larger jobs. These are underwritten on your financials, experience and backlog, and having an agent who understands the packaging speeds up approval considerably.
Fidelity and business service bonds
Protect your clients against employee theft. Cleaning companies, home health agencies and property managers often need one to win contracts. Different from a crime insurance policy, and usually much cheaper.
Court and probate bonds
Executor, administrator, conservator and guardian bonds required by Connecticut probate courts, plus appeal and other court bonds.
Why contractors in particular should have a bond relationship set up before they need it
Bid bonds are due with the bid, and bid deadlines do not move. If you have never been bonded, the first performance bond requires financial statements, a contractor questionnaire and sometimes a personal indemnity agreement, and that takes time. Setting up a bond line with a surety before the first public bid means you can get a bid bond in a day instead of scrambling. We do this alongside your contractor insurance, general liability and workers’ comp so the whole program lives in one place.
What we need to quote
For license and permit bonds: the bond form or the agency’s requirement, the bond amount, and basic business information. Many are issued on a simple application with no financials. For contract bonds: business and often personal financial statements, a summary of completed projects, and the contract or bid documents. For fidelity bonds: number of employees and the coverage amount required.
Bond questions
How much does a surety bond cost in Connecticut?
Premium is a percentage of the bond amount, usually one to three percent per year for license and permit bonds with good credit, and rated on financials for contract bonds. A $10,000 license bond might cost $100 to $300 a year.
Is a surety bond the same as liability insurance?
No. Liability insurance protects you from claims. A bond guarantees your performance to someone else and you are required to repay the surety if it pays a claim. Most contractors need both.
How quickly can I get a bond?
License, permit and fidelity bonds are often issued the same or next business day. Contract bonds depend on underwriting your financials, so plan for one to two weeks the first time and much faster once a bond line is established.
Can I get bonded with bad credit?
Often yes, for smaller license and permit bonds, at a higher rate. Contract bonds are harder. Tell us the situation and we will tell you what is realistic.
Independent agent, direct line
Talk to Brandon directly
One agent, multiple carriers, and a policy read line by line before you sign it.