Common Mistakes Contractors Make When Applying for Bonds

Applying for a surety bond is a critical step for contractors looking to win jobs, meet licensing requirements, and qualify for public projects. However, even experienced contractors can make mistakes during the bonding process that delay approvals, increase costs, or cause a denial.

As you prepare your surety bond application, review our guide to the most common mistakes contractors make when applying for bonds and how to avoid them.

7 Common Errors Contractors Make on Their Surety Bond Applications

Whether it’s making sure you’re applying for the right type of surety bond or checking that you’re not bidding on a project exceeding your bond capacity, you have a lot of ways you can avoid common mistakes that lead to a denied surety bond application. Instead of risking a denial, learn more about the top seven errors general contractors make on their applications for surety bonds:

1. Waiting Until the Last Minute

Bonding takes time—especially for larger or more complex projects. Waiting until the day before a bid is due or a license expires can lead to unnecessary stress or missed opportunities. 

Plus, trying to rush in to complete a bond a day before it’s due significantly raises the chances your application has errors that would have been caught if more time had been spent on it.

How to Ensure Your Surety Bond Application Is In On Time

Start the bonding process as soon as you become aware of the requirement. More complex surety bonds can take underwriters around two to four weeks to process, so try to give your agent as much time as possible to gather documents, underwrite the file, and issue the bond without needing to rush.

2. Incomplete or Inaccurate Applications

Missing information, outdated financials, or inconsistent details can slow down the approval process or raise red flags with underwriters. Surety bond issuers are looking at a contractor’s character, capacity, and capital when approving applications. 

Sloppy mistakes on the application, such as misspelling company names or leaving essential information blank, indicate carelessness and can impact their view of the applicant’s character. Even if approved, a mistake could also result in a general contractor surety bond with higher premiums or fees that could have been avoided.

How to Ensure Your Surety Bond Application Is Accurate and Complete

Before you submit your surety bond application, double-check it for accuracy and completeness. Include all requested documents and be transparent about your financials and experience.

3. Not Understanding the General Indemnity Agreement

Many contractors sign the General Indemnity Agreement (GIA) without fully understanding what it means. This legal document makes you (and often your spouse or business partners) personally responsible for reimbursing the surety if a claim is paid.

How to Ensure You Understand Your GIA

Review the GIA carefully and ask your bond agent to explain any terms you don’t understand. Many surety bond agents will be happy to walk you through the GIA, highlight any non-standard clauses, and ensure you fully understand the agreement before you sign it.

4. Overestimating Bonding Capacity

Some contractors bid on projects that exceed their bonding capacity, only to find out they can’t get the bond approved. This mistake can damage your credibility with project owners and bonding companies, as it indicates that the applicant doesn’t have a strong handle on their financials or the bonding process.

How to Ensure Your Bonding Capacity Estimate Is Accurate

Know your current bonding limits and work with your agent to increase capacity gradually as your business grows. To increase your bonding capacity, you’ll need to strengthen your financial foundation and build a proven track record on smaller to mid-sized projects. 

5. Ignoring Credit and Financial Health

Your personal and business credit scores, financial statements, and debt levels all play a role in bond approval. Poor credit or weak financials can lead to higher premiums or denials.

How to Ensure Your Credit Helps Surety Bond Approval

Monitor your credit, pay down debt, and keep your financials clean and up to date. When you prepare your year-end financial statements, work with a CPA to prevent mistakes and ensure you can provide a comprehensive document of your company’s financial health to the surety. 

When a surety company determines your risk profile, it’ll review these financial statements alongside credit reports and tax reports. If the information you provide isn’t accurate or current, it can significantly hurt your chances of receiving approval.

6. Not Working with a Surety Specialist

Insurance is not the same as bonds, and most insurance agents aren’t experts in surety bonds. Despite this, some contractors will end up working with an insurance agent for their surety bond. 

While these agents are skilled at connecting companies with the right insurance plans, they often don’t have the expertise or carrier relationships needed to secure the best bond terms, especially for complex or high-value projects. Their lack of expertise can lead to higher premiums, delays in the process, and mistakes.

How to Ensure You Find the Right Surety Bond Specialist

Partner with a surety agent who specializes in surety bonding. They’ll understand the underwriting process, present your file in the most effective manner, and advocate on your behalf.
After the application is approved, they can further support your long-term growth by helping you raise your bonding capacity, advising you on strategic decisions, and connecting you with other surety bond experts.

7. Failing to Communicate with the Surety

If your business is growing, taking on new partners, or facing challenges, your surety needs to know. Lack of communication can lead to surprises during renewal or when applying for a new surety bond.

How to Ensure Your Surety Knows Everything Necessary

During and after the bond application process, keep your bond agent informed of major changes in your business. Transparency builds trust and helps you stay ahead of potential issues.

Ready to Apply for a Surety Bond the Right Way?

At ProSure Group, we help contractors avoid common pitfalls and navigate the bonding process with confidence. Whether you’re applying for your first bond or managing a growing portfolio of projects, we’ll teach you how to fill out a surety bond application correctly and put yourself in the best position to receive approval for surety bonds matching your capacity. 

📞 Call us at (800) 480-3883

 🌐 Visit us at www.prosuregroup.com

 📩 Or request a consultation today by emailing Contractbonds@prosuregroup.com