Quick Answer
South Carolina requires a surety bond for most contractor license renewals, public construction contracts over $50,000, and notary commissions. A standard $15,000 contractor license bond usually costs $150 to $450 a year, priced at 1 percent to 3 percent of the bond face value based on personal credit, not a flat premium. The Morgano Agency places license, bid, performance, payment, and notary bonds across multiple surety carriers in Greenville.
Types of Surety Bonds Used in South Carolina
A surety bond is a three-party agreement. The principal (the contractor, notary, or business) pays a premium for the surety (the bond carrier) to guarantee an obligation to the obligee (the state, the public agency, or another party). If the principal fails to perform, the surety pays the obligee up to the face amount of the bond and then collects from the principal. The most common bond types in South Carolina are:
- License Bond: Required by SC LLR or local government before issuing or renewing a contractor or trade license.
- Bid Bond: Submitted with a bid to guarantee the contractor will accept the contract at the bid price if awarded.
- Performance Bond: Guarantees the contractor will complete the contract per its terms.
- Payment Bond: Guarantees the contractor will pay subcontractors, laborers, and material suppliers.
- Maintenance Bond: Covers defects in work or materials for a stated warranty period after completion.
- Subdivision Bond: Required by local governments before a developer can record a plat; guarantees public improvements like roads, sidewalks, and drainage.
- Court Bond: Includes appeal bonds, attachment bonds, injunction bonds, and probate or fiduciary bonds required by court order.
- Notary Bond: Required for notaries public in South Carolina at $10,000 face value under SC Code 26-1-90.
- Auto Dealer Bond: Required by the SC DMV for licensed dealers at $30,000 face value.
- Mortgage Broker Bond: Required by the SC Department of Consumer Affairs.
South Carolina Contractor License Bond Requirements
Under SC LLR (Licensing & Regulation) rules, residential builders typically need a $15,000 license bond, while specialty contractors in HVAC, plumbing, mechanical, and electrical typically need a $10,000 license bond. Some commercial general contractor classifications use net-worth thresholds and financial-statement requirements instead of or in addition to a license bond. Premium on a license bond runs roughly 1 percent to 3 percent of the bond face value per year for contractors with good credit, which means a $15,000 license bond often costs $150 to $450 a year, not the full face value.
Performance and Payment Bonds for SC Public Construction
Under the SC Little Miller Act (SC Code 11-35-3030), any state or local public works project in South Carolina above $50,000 requires a performance bond at 100 percent of the contract value AND a payment bond at 100 percent of the contract value. The performance bond protects the public agency if the contractor fails to complete the work; the payment bond protects subcontractors, laborers, and material suppliers if the contractor fails to pay them. These bonds are not optional on qualifying public jobs, and the bond is typically required at contract signing.
How Surety Bond Premiums Are Priced
Surety bonds are underwritten on the principal’s credit, not on the bond face value alone. License bond premium typically runs 1 percent to 3 percent of the bond face value per year for a contractor with good personal credit. Contract bonds (performance and payment) on construction projects also typically run 1 percent to 3 percent of the contract value, on a sliding scale that drops to under 1 percent on very large projects. Contractors with thin credit may pay 3 percent to 5 percent or be required to collateralize the bond with cash or a letter of credit.
The underwriting decision considers personal credit, business financial statements, prior bond history, and the size of the bond relative to the contractor’s net worth. A surety wants to see that the principal could complete the obligation even without the bond.
Bid Bonds, Maintenance Bonds, and Subdivision Bonds
Bid bonds usually run 5 percent to 10 percent of the bid value as a face amount and are required when bidding most public projects in South Carolina. The bid bond is forfeited if the contractor wins the job and then refuses to sign. Maintenance bonds run for a stated warranty period after the project is accepted, typically one to two years, and cover defects in work or materials. Subdivision bonds are posted by developers with the City of Greenville, the County, or another local jurisdiction before a plat can be recorded; the bond guarantees the developer will complete the public improvements on time.
License Bonds and Notary Bonds in South Carolina
Beyond contractor bonds, the most common South Carolina license bonds we issue are auto dealer bonds ($30,000 face value, required by SC DMV), mortgage broker bonds (required by SC Department of Consumer Affairs), and notary bonds ($10,000 face value, required under SC Code 26-1-90). Each has a specific statutory form, and the bond must be filed with the right agency on the agency’s form before the license is issued.
How to Get a Surety Bond Issued in Greenville, SC
For a simple license or notary bond, the process is usually same-day: complete an application, provide a copy of your license or certification, and pay the premium. For contract surety bonds (performance and payment) the surety needs business financial statements, prior bond history, project specs, and sometimes a personal indemnity agreement. Our office at 206B Pine Knoll Dr in Greenville handles both, and we work with Travelers, The Hartford, Liberty Mutual, Old Republic, Zurich, CNA, and other specialty bond carriers to place the bond at the best rate available for the contractor’s credit and bond size.
What Drives Surety Bond Premium
Surety underwriting is credit-driven, not exposure-driven. Six factors move the rate, but personal credit and bond type are the biggest two.
Frequently Asked Questions
What is the difference between performance and payment bonds?
A performance bond protects the public owner or general contractor if a contractor fails to complete the work. A payment bond protects the subcontractors, laborers, and material suppliers if the contractor fails to pay them. On public construction projects above $50,000 in South Carolina, the SC Little Miller Act requires BOTH at 100 percent of the contract value.
Are surety bonds the same as insurance?
No. Insurance protects the policyholder against an unexpected loss. A surety bond protects a third party (the obligee) against the principal’s failure to perform. If a surety pays a claim, the surety collects the money back from the principal. With insurance, the carrier pays and the insured does not repay.
How much does a contractor license bond cost in SC?
A South Carolina contractor license bond typically costs 1 percent to 3 percent of the bond face value per year, depending on the contractor’s personal credit. A $15,000 residential builder license bond usually runs $150 to $450 per year for contractors with good credit. Contractors with weak credit may pay 3 percent to 5 percent or be required to collateralize the bond.
How long does it take to get a surety bond?
Simple license and notary bonds are typically issued same day or next business day after the application is complete and the premium is paid. Contract bonds (performance and payment) on construction projects take longer because the surety needs to review financial statements; underwriting commonly takes 3 to 10 business days on a first contract bond, and same-day or next-day after the contractor is set up with the surety.
Does The Morgano Agency issue notary bonds in South Carolina?
Yes. South Carolina notaries public are required to file a $10,000 surety bond with their commission application under SC Code 26-1-90. We issue the bond, prepare the statutory form, and forward it to the Secretary of State along with the notary commission paperwork.
Can I get a surety bond with bad credit?
Yes, but the price is higher. Standard-market sureties price 1 to 3 percent of bond face on good credit. Sub-standard credit (under 650 FICO) typically prices 3 to 10 percent through a high-risk surety market, sometimes with cash or letter-of-credit collateral. We work with both standard and substandard markets so the bond gets issued even when credit is rough.
Who is the principal, obligee, and surety on a bond?
The principal is the party that needs the bond, usually the contractor or notary. The obligee is the party requiring the bond, usually a public agency, a court, or a general contractor. The surety is the bond carrier (insurance company) that guarantees the obligation. The principal pays the premium; the obligee gets the protection; the surety underwrites and stands behind the bond.
Get a Quote from The Morgano Agency
Call (864) 609-5285 or request a quote online. Independent agency, multiple insurance carriers, Greenville-based.
Related coverage: see our Business Insurance overview, General Liability, or Contractors Insurance.
The Morgano Agency Inc
206B Pine Knoll Dr, Greenville, SC 29609
(864) 609-5285
Monday through Friday, 9:00 AM to 5:00 PM