Bonding in Georgia

A surety bond is a 3-party promise. The contractor (the principal) pays a surety company for a bond that a customer, subcontractor, or the state (the obligee) can draw against if the contractor breaks the rules the bond covers. The surety pays valid claims up to the bond face value. The contractor then owes the surety for what the surety paid out. A bond protects the public. It is not insurance for the contractor. Georgia uses bonds in 2 distinct places that trade contractors need to track. Keep them separate. 1. State licensing board bond: residential and general contractors. The Georgia State Licensing Board for Residential and General Contractors, established under O.C.G.A. Chapter 43-41, requires applicants to show financial responsibility as a condition of licensure. An applicant can meet that showing either by documenting a minimum net worth set by the appropriate division, or by filing a $25,000 surety bond in the form the board prescribes. The board has published a sample surety bond form on the Secretary of State site. The bond runs in favor of purchasers of structures built by the contractor and their successors in title, and it covers failure to comply with the contractor's written contracts or warranties in connection with the sale or exchange of a structure. Premium math on the $25,000 board bond typically runs $250 per year for a contractor with solid credit and no prior claims, with monthly-pay options advertised by Georgia surety agencies. Weaker credit, prior surety losses, or a new business can push the rate higher. Specialty trades licensed separately, such as electrical, plumbing, HVAC, and low-voltage, are regulated under different Georgia chapters and are not required to post the residential/general contractor bond on the license itself. Confirm your specific trade board requirement before you assume a bond is or is not needed. 2. Public works payment and performance bonds (Georgia's Little Miller Act). O.C.G.A. Title 13, Chapter 10 (the Little Miller Act) and the parallel local-government provisions in O.C.G.A. Title 36, Chapter 91 require the prime contractor on a Georgia public works contract to post a payment bond and a performance bond before starting work. House Bill 137, signed in 2025 and effective July 1, 2025, raised the contract-value trigger from $100,000 to $250,000. Contracts above that threshold require bonds; contracts at or below it are exempt from the statutory bond requirement, though a public owner can still require bonds by contract. The payment bond equals the contract price and protects subcontractors, laborers, and suppliers. The performance bond guarantees the contractor will complete the contract and equals the contract price as well. These bonds are not the state licensing board bond. They are project-specific and priced per job, usually 0.5% to 3% of the contract price depending on credit and contract size. What claims look like. For the licensing board bond, a homeowner files a complaint with the State Licensing Board. If a board order or court judgment establishes an unpaid obligation within the bond's coverage, the claimant can pursue the surety. The surety pays, then pursues the contractor. For a public works payment bond, a subcontractor or supplier follows the notice and claim steps in O.C.G.A. 13-10-63 and related sections. Bond, insurance, and workers' compensation are separate requirements. A Georgia contractor under Chapter 43-41 must also show general liability insurance in an amount set by the division and workers' compensation insurance as required by state law. Confirm each requirement against the current rule before you assume you are compliant.