This article is a companion to Episode 3 of Speaking of Insurance, a conversation between Brian Bollinger and Aaron Bollinger released on 28 August 2026. It follows the conversation's own order, quotes the hosts where their wording is the point, and adds nothing they did not say. The episode page carries the full transcript.

The sentence the hosts repeat until it sticks: a bond is not insurance. In Brian's words, it is “a promissory note that you're signing.” If the surety has to make good on your contract, it hires someone else to finish the job at whatever that costs, sends you the bill for the difference, and pursues your corporate and personal assets — your house included — to collect.

What a bond actually is

Aaron opens by comparing a bond to a mortgage: you leverage assets against it, and eligibility gets hard with a poor credit history. Brian sharpens the picture. Think of it as a line of credit from a bank, except the bank is the bonding company, and what it is extending credit against is your promise to perform a contract. Because the surety is on the hook for that promise, it has to satisfy itself that you have the personal and corporate assets to cover it, a track record of completing projects like it, no bankruptcies, a clean payment history and a strong FICO score. A Dun & Bradstreet report sometimes enters the picture too.

The surety's economics are simple, and the hosts are frank about them. It wants to collect its premium — Brian puts the range at one to three percent of the bond, with three percent typical and lower rates available to large programs that bond continuously — and never have to perform. It wants you to finish the job. Its interest and yours are aligned right up until the moment they are not.

The licence bond: small, and where the first problems show

Every licensed California contractor carries a bond with the Contractors State License Board. Brian describes the state raising the required amount over the years — “a couple thousand, five thousand to ten thousand, fifteen thousand to twenty-five thousand” — and predicts it will rise again. The Board's published requirement is $25,000, in force since 1 January 2023 under Senate Bill 607; confirm the current figure on the CSLB's own page rather than in any article, including this one. What the licence bond does is give a customer who feels the work was not done, or the money was taken and the job not finished, some recourse against the contractor, up to the bond amount. It is not a guarantee of the whole job and it is not insurance.

For a contractor with clean credit, Brian puts the cost at roughly $100 to $200 a year, often around $150, and Bollinsure will frequently place a two-, three- or five-year term so the renewal stops being a thing anyone has to remember. That is the easy case. The hard case is the contractor with a low FICO score, a payment-history problem or a bankruptcy: some sureties will still write it, at a materially higher price. Brian recalls one client whose bond ran to $600 to $900 a year after a car-loan refinance went wrong — the old loan was never paid off, the payments went unpaid, and the credit file took the hit. He is careful to say the problem is rarely a contractor's performance. Licensed contractors want to stay licensed. The problem is qualifying on financial capacity, “like a line of credit,” and most people do not think of it that way until it is too late.

Project bonds are a different animal

The step Brian calls “even more difficult” is establishing a surety relationship for project-specific bonds — bid, performance and payment bonds on the larger jobs a growing contractor starts to chase. He has watched clients try to get onto projects in the $5 million to $50 million range and fail to obtain the bond, not for lack of skill but for lack of demonstrated financial capacity and a record of similar work. The surety was not excited, because the surety would be the one paying if the job went wrong.

Scale changes the process. Under roughly a quarter- to half-million dollars, Brian says, some sureties will issue the same day. Above about $1 million to $2 million they want financial statements for the company. Above a couple of million, a submission goes to management review — “a team of underwriters around the table” poking holes in it — and any black hole in the financials is likely to surface there and undermine the whole application. Expect a couple of weeks to a couple of months depending on size and complexity.

Capacity, not a bond

What a contractor is really building is not a bond but bonding capacity: an approved aggregate — Brian uses $2 million, $5 million and $10 million as illustrations — under which bid bonds can be issued and converted to project bonds as jobs are won, so long as the work in progress stays under the ceiling. Sureties generally want to be your only surety, and the reason is exactly this: they want to know how much of your collateral you have already promised. A $10 million bond with company A, $5 million with company B and a few million scattered elsewhere against $10 million of collateral is a problem for you and for them.

The relationship runs on communication. You report work in progress, the surety signs off, and the rate comes down as volume rises and re-underwriting each project becomes unnecessary. Brian's advice to contractors who avoid bonded work altogether is to reconsider: do not run from a project because it requires a bid or performance bond, but start the conversation with your broker early and get pre-approved for capacity, so those projects become bids rather than pass-overs. Declining that path, he says, can mean “giving up on hundreds of thousands or millions of dollars in projects unnecessarily.” Prevailing-wage requirements on public work are a separate can of worms the same projects tend to open.

What the underwriters want to see

  • Bid-versus-actual profitability. Somewhere between $5 million and $20 million of gross revenue, Brian says, a contractor has to become a professional organisation: track what you bid, what you projected, and what you actually made on each job, and adjust the bidding. The sureties care about this as much as you should.
  • CPA-reviewed financials. Not fully audited — nobody is checking every meal receipt — but a CPA who has looked at the balance sheet and profit and loss and can say they hold together. It gives the underwriting team confidence that you know what you are doing and bid profitably.
  • A clean file. No bankruptcies, no payment-history surprises, no unexplained gaps. The management review will find them.
  • A co-signer, or a change of surety, when capacity is short. Both are moves Brian has made for clients whose experience or balance sheet did not yet match the project.
  • Negotiate the bond percentage where the owner allows it. On a $1 million or $5 million project, ask whether a 10 or 20 percent bond will do. Some owners will; many cities and counties will not. On a $50 million bond Bollinsure was working on at the time of recording, the first move was to ask whether it could come down to $5 million, because “that makes such a meaningful difference on the underwriting.”

The instant online bond, and where it stops working

Aaron raises the search-result sureties promising same-day issuance. Brian is measured. For a clean licence bond they are fine, and Bollinsure works with sureties that approve quickly too. Where they fall down is scale and trouble: he has not seen the low-cost outfits grow with a contractor, some clients have had to change surety over a late payment or a small wrinkle, and when something goes sideways — identity theft, a cyber incident, a dispute that is not your fault — an entity that is “just full on internet, and there's no people behind them” is hard to work with. His practical advice: plan on it taking longer than a couple of minutes, and if there is any wrinkle in your history, be prepared to explain it to a person.

How contractors implode

Aaron points to the June 2026 administration of Ardmore Construction Group, a UK contractor with turnover near £346 million, and argues that when a contractor of that size fails its sureties and their reinsurers feel it and appetite tightens everywhere. He asks how default risk grows with size. Brian's answer is about pace. Most of Bollinsure's contractor clients are family-owned, conservatively run and grow in a straight line. The failures he has seen come from expanding too fast, from taking multi-state work without the crews and quality control to support it, and from the loss of the key person — the responsible managing officer or employee — with no one ready to step in. He has seen that last one go both ways: once the spouse and team stepped up and the business grew; once it “literally imploded.”

The example he lingers on is a subcontractor on an apartment project where a payment dispute, a design error and an under-engineered ceiling turned into a lawsuit that pulled in the general liability, the bonds and everyone attached to the job. Some of the companies involved no longer exist. The surety's fear of a contractor doubling in size is that costs explode and quality slips at the same moment the economic cycle turns.

The collateral conversation

Brian closes on the part that surprises people. Insurance for $5 million or $10 million feels like risking the business. Signing a surety's general indemnity agreement feels different, because it says in plain language that they can take your home. “You're signing away your business entity. You're signing away your home. You're signing away your cars.” He has watched clients pause at that point in their growth, and he thinks the pause is prudent. Not a reason to walk away from bigger projects — a reason to go in, as he puts it, eyes wide open, knowing that a bond is a bank loan if things go bad.

Where this fits in your insurance program

Bonds sit beside, not inside, the rest of a contractor's program. Our surety bonds page covers licence, bid, performance and payment bonds; contractor insurance and the contractor insurance guide cover the general liability, tools and equipment, commercial auto and workers' compensation that a bonded project will also require. The hosts took up the workers' compensation side in Episode 4. If you are growing toward bonded work, the useful first step is the one Brian describes: start the capacity conversation before the bid, not after.

Primary sources