Surety bonds for New York contractors and businesses
A surety bond is a guarantee that you will do what you have promised: finish a contract, follow licensing rules, or carry out a duty a court or agency has given you. In New York City, surety bonds come up constantly for contractors bidding on work, businesses applying for licenses and permits, and people appointed to handle an estate.
Gordon Companies is an independent brokerage in Midtown Manhattan, working with New York clients since 1968. We help you pin down exactly which bond is being asked for, then work with surety markets to get it issued, with a real person handling the paperwork alongside you.
How a surety bond works
Every surety bond involves three parties:
- The principal: you, the business or person who has to perform
- The obligee: the party requiring the bond, such as a project owner, a government agency or a court
- The surety: the company that guarantees the principal’s obligation
If the principal fails to meet the obligation, the obligee can make a claim against the bond. Unlike insurance, the surety generally expects the principal to repay any claim it pays. That is why underwriting looks closely at credit, finances and experience.
Bonds vs. insurance
Insurance protects you. A bond protects the party that required it. Many clients need both: a contractor on a bonded job is usually also asked for proof of general liability and workers’ compensation coverage.
Types of surety bonds we place
Contract bonds
Contract bonds guarantee work on a construction project. Public projects commonly require them, and many private owners and general contractors do too.
- Bid bonds, guaranteeing you will enter the contract at your bid price if awarded
- Performance bonds, guaranteeing the work will be completed according to the contract
- Payment bonds, guaranteeing subcontractors and suppliers will be paid
- Maintenance bonds, covering defects for a set period after completion
License and permit bonds
Many state and city agencies require a bond before issuing certain licenses or permits. The bond guarantees you will follow the rules that come with the license. Requirements vary by trade and agency, so bring us the exact form or notice you received.
Court and fiduciary bonds
Courts may require bonds from executors, administrators, guardians and others managing assets on someone else’s behalf, as well as in certain lawsuits and appeals.
Other commercial bonds
This group includes fidelity bonds, which protect a business against theft by its own employees, and lost title bonds, which some motor vehicle agencies accept as proof of ownership when the paperwork is missing.
What affects bond approval and cost
A bond’s cost is usually a percentage of the bond amount, set by the surety based on its view of the risk. The factors that typically matter most:
- The type and amount of the bond
- Personal and business credit
- Financial statements, for larger contract bonds
- Experience and track record on similar work
- The specific terms of the contract or bond form
Gaps we look for
- Bond forms with unusual wording that expands your obligation
- Bond amounts or terms that do not match the contract or license
- Bonding capacity that has not kept pace with the jobs you want to bid
- Insurance requirements in the same contract that your policies do not yet meet
Contractors usually pair bonding with contractors insurance and, on new construction or major renovations, builders risk coverage. We look at the bond and the insurance together so they line up.
Questions we hear about surety bonds
How long does it take to get a surety bond?
It depends on the bond. Many license and permit bonds are straightforward, while larger contract bonds need a financial review. Send us the requirements early, especially before a bid deadline.
Can I get a bond with less-than-perfect credit?
Often, yes, though credit can affect which bonds and terms are available. Some surety markets focus on harder-to-place bonds, and we can look there.
Who pays if there is a claim on my bond?
The surety may pay the obligee first, but you are generally responsible for reimbursing the surety under the indemnity agreement you sign when the bond is issued.
What do I need to apply for a surety bond?
The bond form or requirement from the obligee, the bond amount and basic information about your business. Larger contract bonds typically also call for financial statements and a list of current and completed work.
Related coverage
Request your surety bond
Send us the bond requirement and we will tell you what it takes to get it issued. Start a request online or call Aaron and the team at 212-687-2525, Monday to Friday, 9am to 5pm. You will speak with a real person.
