Running a contracting business in North Texas often means navigating bonding requirements. Whether you are bidding on a municipal job in Plano, pulling a permit in McKinney, or managing subcontractors in Prosper, the right bond can make the difference between winning the contract and getting disqualified.
At The Sterling Insurance Group, we work with contractors across Dallas-area suburbs—roofers, electricians, remodelers, HVAC techs, and builders—to help secure the right bonds quickly and at a fair price. If you are unsure which bonds apply to your work, you are not alone. This guide covers the most common contractor bonds, what they do, and when you’ll need them.
1. License and Permit Bonds
What They Are: Required by many cities and counties, these bonds allow contractors to operate legally.
Who Needs Them: General contractors, electricians, plumbers, and HVAC specialists in Plano, McKinney, and surrounding cities.
What They Do: They guarantee compliance with building codes and permit rules. If you cut corners, the city can file a claim against your bond.
Example: A plumber in Richardson may need a $10,000 license bond to renew their city license.
2. Bid Bonds
What They Are: A financial guarantee that your bid on a public project is valid and backed.
Who Needs Them: Contractors bidding on school renovations, city projects, or large commercial builds in Dallas suburbs.
What They Do: They assure project owners you won’t walk away after being awarded the contract.
Example: A general contractor in Allen bidding $250,000 on a city hall repair posts a bid bond to secure the offer.
3. Performance Bonds
What They Are: Guarantees you will complete the work as outlined in the contract.
Who Needs Them: Typically required for public projects or private jobs with high stakes.
What They Do: Protects the client if you abandon the job or deliver subpar work.
Example: A remodeling company in Prosper lands a fire station project that requires a $600,000 performance bond.
4. Payment Bonds
What They Are: Ensure subcontractors and suppliers get paid.
Who Needs Them: Contractors hiring crews or vendors for bonded projects.
What They Do: Prevents liens by guaranteeing payment for labor and materials.
Example: A McKinney commercial builder’s payment bond covers the roofing subcontractor on a school project.
5. Maintenance Bonds
What They Are: Cover workmanship or materials for a period after the project is complete.
Who Needs Them: Contractors on public works or high-end builds.
What They Do: Acts like a warranty for 1–2 years after completion.
Example: A paving company in Plano installs city sidewalks under a one-year maintenance bond to cover defects.
6. Subdivision (Site Improvement) Bonds
What They Are: Guarantee infrastructure improvements in new developments.
Who Needs Them: Developers and civil contractors working with municipalities.
What They Do: Ensure roads, sewers, and sidewalks are finished to city standards.
Example: A Celina developer posts a $1 million subdivision bond for a new neighborhood build.
7. Supply Bonds
What They Are: Guarantee delivery of contracted materials, on time and to spec.
Who Needs Them: Suppliers and contractors providing large orders.
What They Do: Protect project timelines and quality standards.
Example: A Richardson supplier agrees to deliver steel beams for a municipal garage; a supply bond backs the contract.
8. Right-of-Way (ROW) Bonds
What They Are: Required when work disrupts public property.
Who Needs Them: Utility contractors, excavators, and builders working near streets or sidewalks.
What They Do: Guarantee you restore public property to city standards.
Example: A utility company in Allen replaces a water line under a city street, backed by a ROW bond.
9. Court and Probate Bonds (Less Common)
What They Are: Bonds tied to legal or probate work.
Example: A contractor repairing an inherited property in McKinney for a court-appointed executor may need a probate bond.
Bonding Rules in the Dallas Suburbs
Cities like Plano, McKinney, Richardson, Allen, Celina, and Prosper often require bonds for contractors, electricians, plumbers, and developers. Without the proper bond, you may face delays or lose eligibility to bid.
How to Get a Contractor Bond in Texas
At The Sterling Insurance Group, the process is simple:
- Provide your business and license details
- Share the bond amount required
- Submit basic financial information (for larger bonds)
- Complete a quick application (we’ll walk you through it)
License bonds can often be approved in minutes. Larger bonds—like performance or subdivision—may take a few days.
Bond Costs
Premiums depend on bond type, size, credit, and experience.
- License Bonds: $100–$500 annually
- Bid Bonds: Often free with performance/payment bonds
- Performance Bonds: 1–3% of contract value
- Subdivision Bonds: 2–5% of project size
Why Bonds Matter
Contractor bonds are more than paperwork. They:
- Build trust with clients
- Help win larger, more profitable jobs
- Protect against disputes and liens
- Strengthen your reputation as a reliable professional
Final Thoughts: Make Bonding Easy
Securing the right contractor bond can feel like one more hoop to jump through, but it is a straightforward process when you have the right partner.
At The Sterling Insurance Group, we help contractors in Plano, McKinney, Allen, Celina, Prosper, and Richardson get bonded quickly and affordably. Whether you need a license bond tomorrow or a performance bond for a major municipal project, we are here to make it simple.
Need a contractor bond now? Let’s talk.
Call The Sterling Insurance Group in Dallas, TX today.
Phone: (972) 964-4825
Email: info@sterlinginsnow.com
Website: www.sterlinginsnow.com