Excavation Bonds

Excavation bonds, also recognized as earthmoving bonds, serve as essential assurances within the construction and demolition industry. These bonds are legal agreements involving contractors, governing bodies overseeing earthmoving activities, and surety companies. 

These bonds are required in several states to acquire excavation licenses. They guarantee that municipal and state authorities enforce restrictions controlling earthmoving operations such as excavation.

Three key parties are involved in the bond deal. The Principal is the contractor who is doing the excavation job. The Obligee is the government entity in charge of supervising and regulating the activity. The contractor's performance is guaranteed by the surety firm that issued the bond.

Excavation bonds safeguard the government agency financially in the event of a contractor's noncompliance with rules or contractual requirements. They protect the agency by assuring reimbursement for financial damages caused by noncompliance.

Quick Overview

The cost and bond amount for an excavation bond can vary greatly depending on various factors, including the region, the precise conditions imposed by the obligee (government agency or institution requesting the bond), and the contractor seeking the bond's financial history.


  • The cost of an excavation bond varies based on the bond amount and premium rate. 
  • Premium rates range between 1% and 9% of the total bond amount. 

Bond Amounts: 

  • These range depending on the city and state.
  • Ranges from $5,000 to $100,000 or more, depending on the scope of the project and local regulations.
Sample Excavation Bond
Sample Excavation Bond

State Information

The following states require excavation bonds:

  • Florida
  • Illinois
  • Indiana
  • Kansas
  • Maryland
  • Minneapolis
  • Missouri
  • New Jersey
  • Ohio
  • Pennsylvania
  • Rhode Island
  • South Carolina

Excavation Bond FAQs

What Are Some Common Excavation and Demolition Contractor Bonds Across Different States?

Various states have specific bonds related to excavation and demolition activities. Popular examples include Connecticut Demo and Earth Moving Contractor Bonds, Utah Demo and Earth Moving Contractor Bonds, and numerous city-specific bonds such as City of Denver Excavation Contractor Bond or City of Los Angeles Grading Permit Bond. These bonds cater to distinct regulations and project requirements in different localities.

What Are the Consequences of Operating Without Excavation Bonds?

Operating without the necessary excavation bonds poses the risk of losing one’s business license and ability to operate. It could lead to legal liabilities where contractors might be personally responsible for financial losses or damages incurred during the project. Additionally, the absence of these bonds could hinder a contractor's ability to secure projects, limiting business opportunities and potentially damaging their reputation within the industry.

What Factors Determine the Cost of an Excavation Bond?

The cost of excavation bonds is influenced by a number of factors. The bond amount determined by the obligee (government agency) is critical. Furthermore, the premium rates are influenced by the contractor's credit history, financial soundness, and past experience with similar projects. Premiums typically vary from 1% to 5% of the overall bond value. Contractors with better financial standing frequently earn reduced prices.

What are the criteria for Excavation Bond approval?

Excavation Bond approval is based on the following criteria, which serve as standards for assessing a contractor's financial soundness, experience, and dedication to bond obligations:

  • Financial Condition: Surety bond providers examine a contractor's financial condition, including credit history, assets, and obligations. Contractors with strong financial positions have a better chance of getting approved.
  • Impact of Credit History: A positive credit score substantially influences acceptance, suggesting financial responsibility. Even contractors with poor credit can acquire bonds, but at a higher premium rate.
  • Experience in the Industry: Previous success in similar projects, related qualifications, and licenses establish a contractor's experience, increasing the likelihood of bond acceptance.
  • Regulatory Compliance: It is critical for bond approval to demonstrate compliance with industry standards and legal requirements.
  • Project Specifics: The type and extent of the excavation job are taken into account. The approval decision is influenced by the project's complexity, schedule, and financial considerations.

Can Contractors with Bad Credit Get Excavation Bonds?

Excavation Bonds can be obtained by contractors with less-than-perfect credit. While credit history impacts bond acceptance and premium costs, contractors with negative credit are not generally barred from acquiring bonds.

Aside from credit ratings, surety bond issuers assess a variety of other characteristics. Contractors can still get bonds by demonstrating good financial records, project competence, industry experience, and a comprehensive business strategy. Individuals with poorer credit scores, on the other hand, may pay higher premium rates due to a perceived increased risk.

What Are the Steps to Apply for an Excavation Bond?

Applying for an Excavation Bond involves the following process to ensure contractors meet bonding requirements. Here are the steps:

  • Research and Planning: Look into trustworthy surety bond businesses specializing in Excavation Bonds. Collect all necessary papers, including company licenses, financial accounts, job history, and social security. 
  • Choose a Surety Bond Company: Contact potential surety bond businesses to discuss your bonding requirements. Share information regarding excavation projects, such as the extent, length, and financial implications. These elements will be evaluated by the surety bond business to determine the best bonding option. Some surety providers now allow you to get bond estimates online.
  • Underwriting procedure: Once a surety bond business is selected, the underwriting procedure begins. This process entails evaluating the contractor's financial soundness, creditworthiness, and project experience. 
  • Bond Approval and Issuance: The surety bond business accepts the bond application and issues the Excavation Bond after fulfilling the underwriting standards. Contractors then pay the premium as a proportion of the total bonded amount.
  • Bond Renewal: Excavation bonds are normally issued for a set period of time, usually one year. To preserve compliance and project continuity, contractors must keep track of the bond's expiration date and ensure prompt renewal before it lapses.

Contractors may work directly with professional surety bond providers like SuretyNow to speed bonding. Our staff streamlines the application process by offering advice at each stage, ensuring all relevant documentation is in place, and expediting bond approval whenever feasible.