If you're a Florida contractor — general, electrical, plumbing, HVAC, roofing, anything in the construction trades — surety bonds are part of your professional life. But the bond market is genuinely confusing if no one ever explained the basics to you. Here's a plain-English breakdown of the three bond types Florida contractors deal with most often, what they actually do, and how to qualify for them.

What is a surety bond, really?

A surety bond is a three-party agreement: the obligee (typically a government agency or project owner) requires the principal (you, the contractor) to obtain a bond from a surety (the insurance carrier). The bond guarantees that you'll perform the obligation — pay your taxes, complete the project per contract, follow the licensing rules — and if you don't, the surety pays the obligee and then comes after you to recover the loss. Critically: a surety bond is NOT insurance for you. It's a financial guarantee that protects someone else from your potential failure to perform.

License and permit bonds

Florida's Department of Business and Professional Regulation (DBPR) requires Certified contractors to maintain a license bond — the amount varies by license category but commonly runs $5,000–$20,000. Many Florida counties and municipalities require additional contractor license bonds on top of the state-level bond. These bonds protect consumers from contractor fraud and license violations. License bonds typically cost 1–3% of the bond amount annually for credit-qualified contractors — a $10,000 bond might run $100–300/year. Most Florida license bonds can be issued instantly through Propeller Bonds, which is our primary surety partner.

Performance and payment bonds (P&P bonds)

For larger contracts — particularly public works, government projects, and many private commercial projects — owners require performance and payment bonds. The performance bond guarantees you'll complete the work per the contract; the payment bond guarantees you'll pay your subs and suppliers. Together they're often required at 100% of contract value. Pricing on P&P bonds typically runs 0.5–2.5% of contract value, depending on contract size, your financial strength, and experience. A $1 million contract might require $5,000–25,000 in bond premium.

Bid bonds

For projects requiring P&P bonds, the bid process usually requires a bid bond too — typically 5–10% of the bid amount. The bid bond guarantees you'll honor your bid and execute the contract if awarded. Bid bonds are often issued without premium when bundled with the eventual P&P bond.

How qualifying actually works

For small license bonds — most under $25,000 — qualification is largely credit-based. Run a soft credit pull, answer a short application, and most contractors with a 650+ FICO can bind same-day. Larger P&P bonds require underwriting on three C's: capital (your balance sheet), capacity (your experience and current workload), and character (references and history). Underwriters typically ask for the past three years of business tax returns, current financial statements, a work-in-progress schedule, and personal financial statements from the principals.

The Florida-specific issues

Florida's hurricane risk shows up in surety underwriting. Roofing contractors, in particular, face a more conservative market because of historical claim activity. Newer roofing companies sometimes need collateralized bonds (where you put up cash or a letter of credit equal to the bond amount) until they've built three years of clean track record. Florida's post-storm restoration market also generates fraud concerns that can complicate underwriting for newer contractors operating in storm-affected counties.

If you need a license bond, P&P bond, bid bond, or any other contractor surety placement in Florida, get a quote at our Propeller-powered surety portal, or contact Nymble directly for underwriting-heavy placements that need a human at the wheel.