When you’re running a contracting business in Round Rock, Pflugerville, Hutto, or anywhere
across Central Texas, chances are you’ll need some kind of bond. Whether you’re bidding on a
public project, applying for a license, or working with a general contractor, having the right
bonds in place can be the difference between landing a job and losing it.
At Safe Beacon Insurance, we work with contractors every day—roofers, electricians,
remodelers, HVAC pros, landscapers, and more—to help them secure the right bonds for their
projects. But if you’re not sure what kind of bond you need (or what they even mean), you’re not
alone.
This guide breaks down the most common types of bonds contractors are asked to carry,
what they do, when you need them, and how they protect both you and your clients.
1. License and Permit Bonds
What They Are:
License and permit bonds are often required by state, county, or city governments as a condition
for getting or renewing a contractor’s license.
Who Needs Them:
General contractors, electricians, plumbers, HVAC contractors, and other trades in Round Rock
and the greater Austin area are often required to carry license bonds to operate legally.
What They Do:
They guarantee that the contractor will comply with local laws, building codes, and permit
requirements. If you violate those rules, the city can make a claim against your bond.
Real-World Example:
A Round Rock electrician must post a $10,000 license bond to be approved by the city for
electrical work.
2. Bid BondsWhat They Are:
Bid bonds are typically required when you’re bidding on public jobs (schools, municipal
buildings, infrastructure, etc.). They protect the project owner by guaranteeing that if you’re
awarded the contract, you’ll actually follow through and provide the proper performance and
payment bonds.
Who Needs Them:
Contractors who bid on government or large commercial jobs in Texas.
What They Do:
They assure the project owner that your bid is serious and financially backed. If you bail after
being awarded the contract, the bond covers the cost difference to hire the next lowest bidder.
Real-World Example:
A general contractor in Pflugerville submits a $200,000 bid on a school roof repair. The bid bond
backs up that offer.
3. Performance Bonds
What They Are:
Performance bonds guarantee that you’ll complete a job according to the terms of the contract.
Who Needs Them:
Usually required on public jobs or private jobs with tight timelines or high financial stakes.
What They Do:
They protect the project owner by covering losses if the contractor doesn’t finish the work, walks
off the job, or does substandard work.
Real-World Example:
A Round Rock remodeling contractor is hired to update a fire station. The city requires a
$500,000 performance bond to ensure the project gets done.4. Payment Bonds
What They Are:
Payment bonds go hand-in-hand with performance bonds and guarantee that you’ll pay your
subcontractors, suppliers, and laborers.
Who Needs Them:
Contractors who are hiring subcontractors, especially on government or bonded projects.
What They Do:
They protect the people working under you. If you don’t pay them, they can make a claim
against your payment bond instead of placing a lien on the property.
Real-World Example:
A commercial builder in Hutto wins a school renovation job. The payment bond ensures the HVAC subcontractor gets paid.
4. Payment Bond
What They Are:
Payment bonds go hand-in-hand with performance bonds and guarantee that you’ll pay your
subcontractors, suppliers, and laborers.
Who Needs Them:
Contractors who are hiring subcontractors, especially on government or bonded projects.
What They Do:
They protect the people working under you. If you don’t pay them, they can make a claim
against your payment bond instead of placing a lien on the property.
Real-World Example:
A commercial builder in Hutto wins a school renovation job. The payment bond ensures the subcontractor gets paid.
5. Maintenance Bonds
What They Are:
Maintenance bonds provide a guarantee for a specific period after the job is completed—usually
1 to 2 years. They cover defects in workmanship or materials.
Who Needs Them:
Contractors working on public works or high-end residential projects.
What They Do:
They act like a warranty. If your work fails or causes damage during the covered time, the client
can file a claim.
Real-World Example:
A Round Rock paving company completes a city sidewalk. A 1-year maintenance bond is required to protect against cracking or breaking of the sidewalk.
6. Subdivision Bonds (a.k.a. Site Improvement Bonds)
What They Are:
Subdivision bonds are used by developers and contractors who are building infrastructure (roads,
sidewalks, sewer, water) for new residential or commercial developments.
Who Needs Them:
Land developers, civil contractors, and builders working with municipalities.
What They Do:
They ensure that the required public improvements will be completed to the city’s standards. If
not, the city can use the bond to hire someone else to finish the work.
Real-World Example:
A developer in Georgetown posts a $1 million subdivision bond for a 50-lot residential
neighborhood.
7. Supply Bonds
What They Are:
Supply bonds guarantee that you’ll provide the materials or goods specified in your contract, on
time and to spec.
Who Needs Them:
Suppliers, contractors furnishing large quantities of materials, or those involved in prefabricated
or modular construction.
What They Do:
They help ensure project timelines are met and that shortages or subpar materials don’t delay a
project.
Real-World Example:
A Round Rock contractor agrees to deliver 30 steel I-beams to a site in three weeks. The supply protects the project owner if they fail to deliver.
8. Right-of-Way Bonds
What They Are:
Right-of-way (ROW) bonds are required by cities when your work will disturb public property—
like sidewalks, streets, or utilities.
Who Needs Them:
Utility contractors, excavators, demolition companies, and builders doing curb cuts, driveway
installs, or utility trenching.
What They Do:
They guarantee that you’ll repair and restore public property to city standards once your work is
done.
Real-World Example:
A plumber installs a new water line across a city street in Round Rock. The ROW bond ensures
the street is properly repaved afterward.
9. Court and Probate Bonds (Occasional Needs)
While not common, some contractors get involved in work that requires court or probate bonds,
especially in estate renovation or property disputes.
Real-World Example:
A contractor is hired by a court-appointed executor to repair an inherited property for sale. A
probate bond may be required to cover fiduciary responsibility.
Bonding Requirements in Round Rock and Central Texas
Many cities and counties in the greater Austin area—including Round Rock, Cedar Park,
Georgetown, and Taylor—have bonding requirements for:• General contractors
• Electricians
• Plumbers
• Remodelers
• Developers
Failing to secure the correct bond can delay permit approvals or disqualify you from certain bids.
How to Get a Contractor Bond in Texas
At Safe Beacon Insurance, we make the process straightforward.
Here’s what you typically need:
1. Your business name and license details
2. The amount of the bond required
3. Basic financial or credit info (for some larger bonds)
4. A completed application (we can help!)
For small license bonds, approval can happen in minutes. Larger performance or subdivision
bonds may take a few days, depending on the risk.
Cost of Contractor Bonds
Bond premiums vary based on:
• The type of bond
• The size of the bond (how much is guaranteed)
• Your business and credit history
• Experience in the trade
Average Costs:
• License Bonds: $100–$500/year• Bid Bonds: Often free when bundled with performance/payment bonds
• Performance Bonds: 1–3% of the contract amount
• Subdivision Bonds: 2–5% of total value, depending on credit and scope
Why Bonding Matters
Bonds are about more than compliance—they help you:
• Win better jobs
• Earn trust with clients
• Reduce legal exposure
• Avoid liens or disputes
• Build your professional reputation
In many ways, bonding is a signal to your clients that you’re serious, professional, and
financially stable.
Final Thoughts: Make Bonding Easy with Safe Beacon Insurance
Contractor bonding can feel like another hoop to jump through—but with the right guidance, it’s
just another tool to grow and protect your business.
At Safe Beacon Insurance in Round Rock, TX, we’ve helped hundreds of contractors across
Central Texas get the license, bid, and performance bonds they need to take on bigger projects
with confidence.
We work with reputable bond providers, offer fast turnarounds, and explain everything in plain
English. Whether you’re just getting started or expanding into government or commercial work,
we’ve got your back.
Need a contractor bond fast?
Let’s talk.
Call Safe Beacon Insurance in Round Rock, TX today.
Phone: (512) 535-1918
Email: info@sterlinginsnow.com
Website: https://www.safebeaconinsurance.com