Contractors get their general liability quoted in two days and then spend two months trying to get bonded, and it feels like the bond company is being difficult. It isn't. Insurance prices expected losses. Surety underwrites for zero expected loss and expects to be paid back. A surety bond is a credit instrument dressed as an insurance product — closer to a bank line than to a GL policy — and everything the surety asks for follows from that one fact.
An insurance policy is a two-party contract: you and the carrier. Money moves in one direction, from carrier to insured, and the carrier's recovery rights against you are essentially nil.
A bond is a three-party contract:
The bond exists to protect the obligee, not you. You pay for it, and you remain fully on the hook. That is a genuinely different product from the general liability policy sitting next to it in your file, and it's why the two underwriting processes look nothing alike. If the difference between bid, performance, and payment bonds isn't settled in your mind yet, start with our plain-English bond types explainer.
| Insurance underwriting | Surety prequalification | |
|---|---|---|
| Assumption | A predictable share of insureds will have losses | Zero expected loss |
| What's being priced | Pooled loss cost + expenses | A fee for extending credit |
| Primary data | Payroll, receipts, class code, loss runs | CPA financials, WIP schedule, bank line, experience |
| Recovery from you | Essentially none | Full, under a signed indemnity agreement |
| Typical turnaround | Days | Weeks to months for a first program |
| Who signs | The company | The company, affiliates, owners, and usually spouses |
Every surety underwriter is answering the same three questions, in roughly this order of importance.
Can the balance sheet absorb a bad job? The two numbers that matter most are working capital (current assets minus current liabilities, adjusted — underwriters discount or exclude related-party receivables, inventory, prepaids, and underbillings they don't trust) and tangible net worth (equity less intangibles, goodwill, and officer loans). Revenue barely moves the needle. A $30 million contractor with $400,000 of adjusted working capital will get a smaller program than an $8 million contractor with $1.2 million.
Can you actually build the job? This is the experience test, and it is a hard constraint rather than a ratio. Underwriters look at the largest project you have ever successfully completed, whether the work is in your trade, whether the geography is one you've operated in, whether the schedule and contract terms are ones you've delivered under, and whether you have the equipment and people. A contractor whose biggest completed job is $2 million rarely gets a $12 million single-job approval regardless of the balance sheet, because building bigger is a different skill than building more.
Will you do what you said? Credit history, tax liens, judgments, litigation history, how you handled a bad job in the past, whether subcontractors and suppliers get paid on time, and whether the story you tell matches the documents. Character is the quietest of the three and the one that kills the most files — a contractor who is evasive about a lawsuit or whose WIP doesn't reconcile to the financials is a much bigger problem than one with thin working capital and a straight answer.
Here's what a standard-market prequalification package actually contains. Contractors who assemble this proactively get approved faster and for more.
If you take one thing from this page: the work-in-progress schedule is read before the income statement, and an inaccurate one costs more credibility than a weak balance sheet.
A WIP lists every open contract with contract value, costs incurred to date, estimated cost to complete, percent complete, billings to date, and the resulting overbilling or underbilling. It shows the underwriter job-level profitability in real time instead of a year-end aggregate that hides a fading job inside a good year.
Contractors who produce a monthly WIP that reconciles cleanly to their financials get treated as a better credit than their ratios alone justify. It's the cheapest capacity increase available.
| Metric | Common standard-market rule of thumb | Caveat |
|---|---|---|
| Single-job limit | ~10–15× adjusted working capital | Capped by largest job ever completed |
| Aggregate program | ~20× working capital | Tangible net worth is a second ceiling |
| Bank line | Committed line in place, largely undrawn | A drawn-down line reduces perceived liquidity |
| Debt to equity | Underwriters get uncomfortable above ~3:1 | Equipment-heavy trades are read differently |
| Profit consistency | Three years of positive, stable margins | One loss year isn't fatal — an unexplained one is |
Treat these as orientation, not formulas. Every surety applies its own underwriting guidelines and its own adjustments, which is exactly why the agent placing the account matters — the same financials can produce materially different programs at different sureties.
The General Indemnity Agreement is the reason the whole model works. It obligates the company, affiliated entities, the owners individually, and usually their spouses to reimburse the surety for any loss, cost, or expense on a bond. It typically also grants the right to demand collateral on a claim, access to books and records, and the right to take over or complete the work.
Personal indemnity is standard in the small and mid-market and is generally not negotiable. Spousal signatures are commonly required because jointly-held assets would otherwise sit outside the surety's reach. Corporate-only indemnity exists, but it's an earned position for large, audited, long-tenured contractors — not an opening ask. Have your attorney read the GIA before you sign it, and understand that it typically survives the bonds it was signed for until formally released.
Bond premium is a percentage of contract value, not a rate on payroll or receipts, and it's priced as a credit fee rather than a pooled loss cost — which is why it moves with your financial strength rather than your claims history.
| Contractor profile | Typical 2026 performance & payment bond rate |
|---|---|
| Established, reviewed or audited financials, clean history | ~0.6%–1.5% of contract value, sliding down on larger contracts |
| Mid-market, compiled statements, moderate working capital | ~1.5%–2.5% |
| Emerging / small-contractor or SBA-supported program | ~2.5%–3.5%+ |
| Bid bonds | Usually issued at no separate charge within an approved program |
Illustrative ranges only. Our companion page on what a performance bond costs on a $1M project works a specific example end to end.
Bettr Coverage is an independent commercial insurance agency serving Georgia and the wider Southeast, and BettrBonds is our contract surety operation for Southeast contractors bidding bid, performance, payment, and maintenance bonds on projects from $500,000 to $10 million. Having both under one roof matters more than it sounds: the same WIP schedule that determines your bonding capacity also tells us whether your general liability limits, builders risk, and umbrella are sized for the work you're actually taking on, and the same continuity plan the surety wants to see is the one that belongs in your insurance review. One agency, one relationship, both sides of the file read together.
Send us your last fiscal year statement and a current WIP. We'll tell you where your working capital and experience put your single-job and aggregate capacity, and what to fix first — at no charge.
Get a free bonding & coverage reviewInsurance is a two-party contract priced on expected losses across a pool. Surety is a three-party credit instrument written on the expectation of zero loss, with a signed right to recover everything it pays from you. It's underwritten like a bank line, so it takes bank-line documentation.
CPA financials (current year + two prior), interim statements if the year end is stale, a WIP schedule, completed jobs schedule, AR/AP aging, a bank line letter, a contractor questionnaire, personal financial statements, a continuity plan, and a signed General Indemnity Agreement.
Every open job with contract value, costs to date, cost to complete, percent complete, billings, and over/underbilling. It shows job-level profitability in real time. Heavy overbillings mean customers are financing you; heavy underbillings signal unapproved change orders; declining estimated profit ("fade") is the most damaging pattern of all.
Rules of thumb put single-job capacity around 10–15× adjusted working capital and aggregate near 20×, with tangible net worth as a second ceiling. But experience caps it independently — your largest successfully completed job constrains the number regardless of ratios.
In the small and mid-market, yes, and usually your spouse too. The surety's entire model assumes reimbursement, and jointly-held assets are otherwise out of reach. Corporate-only indemnity is an earned position after years of clean, audited performance. Have your attorney read the GIA first.
Two to four weeks if your documents are already in order; two to three months if your CPA has to prepare or upgrade the statements. Start six months before the first bonded job you want to bid — missed bids are usually a paperwork-timing problem, not a balance-sheet one.
Roughly 0.6%–1.5% of contract value for established contractors on a sliding scale, ~1.5%–2.5% mid-market, and ~2.5%–3.5%+ in small-contractor or SBA-supported programs. Bid bonds are usually included at no separate charge. The rate follows your financial strength, not your claims history.
For general information only. Not legal, tax, or accounting advice, and not a quote, commitment to bond, or contract of insurance. Surety underwriting guidelines, capacity multiples, and documentation requirements are set independently by each surety company and vary substantially by contractor, trade, geography, and program; the ratios described here are widely-used orientation points, not standards. Bond rates are illustrative, not filed rates. A General Indemnity Agreement is a binding legal contract with personal obligations — have it reviewed by your attorney before signing. Bonding subject to underwriting and surety appetite.