Bonding in Nevada

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. Nevada uses bonds in three distinct places. Keep them separate. 1. NSCB License Bond (NRS 624.270). Every Nevada State Contractors Board licensee must file a license bond, or an equivalent cash deposit or financial-instrument substitute, before NSCB will issue or renew a contractor license. The bond amount is tied to the monetary limit requested on the license. Per NAC 624.250, the schedule scales as follows. - Lowest tier: $1,000 - Mid tiers: $5,000 to $50,000 depending on the requested monetary limit - Highest tier: $500,000 for the largest unlimited-scope licenses The exact bond amount NSCB assigns depends on the financial statement submitted and the monetary limit approved. Source: NRS 624.270 (https://www.leg.state.nv.us/NRS/NRS-624.html#NRS624Sec270). Residential Recovery Fund. NRS 624.470 establishes a Residential Recovery Fund, administered by NSCB, that pays eligible homeowner claims against licensed residential and dual-licensed contractors. Funded by per-license assessments paid into the fund by residential and dual-license holders at issuance and renewal. The per-license amount and the per-claim and aggregate caps are set by statute and by board rule. Commercial-only licensees are not eligible to draw from the fund. Confirm the current assessment, claim cap, and eligibility rules directly with NSCB. 2. Public Works Payment and Performance Bonds (NRS Chapter 339). Nevada's Little Miller Act, NRS Chapter 339, requires the prime contractor on a public-works contract with a Nevada governmental entity to post a performance bond and a payment bond before starting work. Per NRS 339.025, both bonds run in the full amount of the contract. The performance bond protects the public body if the contractor fails to complete; the payment bond protects subcontractors and suppliers. Both bonds must be written by a surety authorized in Nevada. These are project bonds, not license bonds. Source: NRS 339.025 (https://www.leg.state.nv.us/NRS/NRS-339.html#NRS339Sec025). 3. Private Mechanic's-Lien Release Bonds (NRS 108). A contractor or owner can post a bond under NRS Chapter 108 to release a mechanic's or materialman's lien from a property. The claim attaches to the bond instead of the real estate. This is a project-specific lien 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. A $5,000 NSCB license bond at 2% is $100 per year. A $50,000 NSCB license bond at 2% is $1,000 per year. Project payment and performance bonds on Chapter 339 work are priced per job, usually 0.5% to 3% of the contract price. What claims look like. For an NSCB license bond, a claimant first files a complaint with NSCB. If the board issues a citation, order, or determination, or if a court enters a judgment within the bond's coverage, the claimant can seek recovery from the bond or, for qualifying residential matters, from the Residential Recovery Fund. The surety pays valid claims, then pursues the contractor for reimbursement. Bond, insurance, and workers' compensation are separate requirements. A Nevada contractor carries the NSCB license bond (or Recovery Fund participation where applicable), general liability insurance at whatever level the work and contract require, and workers' compensation as required under NRS 616 for any employees. Confirm each requirement against the current NSCB rule and your contract before you assume you are compliant.