Knowledge base
Frequently Asked Questions About Nevada & Colorado Surety Bonds
Direct, authoritative answers to the questions our underwriters receive most often from applicants in Nevada and Colorado.
What is a surety bond and how does it work?
A surety bond is a legally binding three-party contract that guarantees a business or individual will fulfill their legal obligations and adhere to state regulations. The three parties involved are the Principal (the business buying the bond), the Obligee (the government agency requiring the bond), and the Surety (the insurance company backing the financial guarantee). Unlike insurance, a surety bond protects the consumer and the state from financial loss caused by your business practices — not your business itself.
What type of surety bond do I need as a Nevada motor vehicle dealer?
To secure or renew your automotive business license in Nevada, the DMV requires a continuous Motor Vehicle Dealer Bond. The typical required limit is $100,000 for standard used or new car dealerships, and $10,000 for motorcycle or utility trailer dealers. This bond guarantees that your dealership complies with consumer protection laws, transfers vehicle titles transparently, and pays state sales taxes accurately.
What is the difference between a license and permit bond and a contract bond?
A license and permit bond is a mandatory filing required by state, county, or municipal jurisdictions as a prerequisite to legally operating a business or trade (e.g., HVAC contractor bonds, DMV dealer bonds). A contract bond — comprising bid, performance, and payment bonds — is project-specific, guaranteeing that a contractor will execute a construction contract exactly according to the project specifications and pay all subcontractors and material suppliers in full.
How much does a surety bond cost in Nevada and Colorado?
The cost of a surety bond, known as the bond premium, is typically calculated as a small percentage of the total bond limit — ranging between 1% and 3% for applicants with strong commercial credit. For a standard $50,000 dealer bond, this equates to an annual cost of $500 to $1,500. For specialized or higher-risk classifications, or applicants with non-prime credit profiles, the premium rate may adjust based on independent underwriting parameters.
Can I purchase a surety bond instantly online?
Yes. At XPRT Insurance, we have streamlined our infrastructure to support instant online surety bond underwriting and digital certificate delivery. For standard commercial, license, permit, and dealer bonds, applicants can input their entity details, pass digital verification, pay their premium, and print their official bond filing paperwork in under five minutes.
The three parties to every surety bond
- Principal
- The person or business required to obtain the bond — that's you.
- Obligee
- The agency, court, or party that requires the bond and is protected by it.
- Surety
- The company that issues the bond and stands behind the guarantee.