Bonding in Nebraska

A surety bond is a 3-party promise. The contractor (the principal) pays a surety company for a bond that a customer, subcontractor, or a government entity (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. Nebraska uses a mix of state-level trade licensing, municipal license bonds for most trades, and public-works bonds for government projects. Keep the categories separate. 1. No statewide general contractor license and no statewide GC license bond. Nebraska does not issue a statewide general contractor license. The Nebraska Contractor Registration Act (Nebraska Revised Statutes sections 48-2101 to 48-2117) requires contractors operating in Nebraska to register with the Nebraska Department of Labor, but the registration does not itself require a statewide surety bond and is not a construction license. Out-of-state contractors must also register and may be subject to additional filing requirements. Source: Nebraska Department of Labor — Contractor Registration (https://dol.nebraska.gov/LaborStandards/ContractorRegistration). 2. Electrical. State license with contractor insurance and local bonds where required. The Nebraska State Electrical Division licenses Electrical Contractors, plus Journeyman, Fire Alarm, and other individual electrician categories. The Electrical Contractor license requires proof of liability insurance on file with the Division. Cities may also require local bonds on top of the state license; verify the local ordinance. Source: Nebraska State Electrical Division — Electrical Contractor (https://electrical.nebraska.gov/electrical-contractor). 3. Plumbing and HVAC. Municipal bonds only. Nebraska does not license plumbers or HVAC contractors at the state level. Cities such as Omaha and Lincoln administer their own license bonds through their plumbing boards and HVAC/ACAD boards. Bond amounts and obligees vary by ordinance. 4. Public works bonds under Nebraska Revised Statutes sections 52-118 and 52-118.01. Any contractor awarded a public construction contract for erecting, furnishing, or repairing any public building, bridge, highway, or other public structure or improvement for the State of Nebraska, any state department or agency, county board, or contracting board of a city, village, or school district must obtain a payment bond. Under current guidance, payment bonds apply for State projects with general contracts exceeding $15,000, and for county, city, village, or school district projects with general contracts exceeding $10,000. Subcontractors and suppliers who have not been paid 90 days after last labor or materials may sue on the bond. Source: Nebraska Revised Statutes section 52-118 (https://nebraskalegislature.gov/laws/statutes.php?statute=52-118). 5. Private projects and construction liens. On private Nebraska projects, subcontractors and suppliers use the construction-lien procedures in Nebraska Revised Statutes Chapter 52, Article 1 (Nebraska Construction Lien Act). An owner or original contractor may post a lien discharge bond under the Act. That is a project-based tool, not a license bond. Premium math. A surety charges an annual premium, typically 1% to 3% of the bond face value for a contractor with strong credit and no prior claims. Weaker credit, tax liens, prior surety losses, or a new business can push the rate to 5% to 10% or more. Public works performance and payment bonds are priced per job, usually 0.5% to 3% of the contract price depending on contract size, job type, and the contractor's financial statements. Bond, insurance, and workers' compensation are separate requirements. A Nebraska trades firm should plan for (1) Nebraska Contractor Registration Act registration, (2) the state Electrical Contractor license and its insurance filing (electricians only), (3) each city license bond for plumbing, HVAC, and other municipal trades, (4) general liability and workers' compensation insurance, and (5) statutory public-works payment bonds on any qualifying public contract.