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Surety Bonds for Alabama Public Works

Alabama’s Public Works Law can require the prime contractor on covered public-property work to provide separate performance and payment bonds before work begins. The published statute describes a performance bond at the full contract price and a payment bond of at least half the price; first confirm that the project qualifies as public works and obtain the bid documents’ bond forms. 1,3

What Is Surety Bonds?

A surety bond guarantees that your business meets a specific obligation to a customer, contracting party or government agency. If a contract, license or permit requires one, get its exact form and amount; a bond is not insurance for your own losses. Read the national Surety bonds guide.

Alabama Requirements

RequirementDetails
Performance bondFor a contract covered by Alabama’s Public Works Law, the statutory performance bond is 100% of the contract price and is due before work begins. 1
Payment bondA separate bond for labor, materials and supplies must be at least 50% of the contract price. 1
Statutory thresholdNo performance and payment bonds are required by § 39-1-1 for a contract below $100,000; verify any separate owner or solicitation bond requirement. 3,1

What to Watch for in Alabama

  • Check public-property and funding scope

    The statutory definition reaches construction, repair, renovation and maintenance of improvements on public property paid wholly or partly with public funds, including lease financing retired with public funds. A project’s title or a private contractor alone does not decide whether the law applies; ask the awarding authority to identify the governing bond requirement in the solicitation. 1,2

  • Price both obligations separately

    The owner-facing performance obligation is bonded for the full contract price, while the separate payment bond is at least half that amount for labor, material and supply claimants. A single certificate or bid bond should not be assumed to satisfy both; compare the executed forms and penal sums with the solicitation before mobilizing. 1

  • Do not wait until after mobilization

    The statute says the bonds are executed before commencing the work. Get the obligee’s approved forms, principal name, required surety evidence and delivery deadline from the award documents early enough to avoid delaying the start. 1,2

  • Confirm if a smaller DCM-jurisdiction project qualifies for the statutory exception

    Alabama DCM’s current guidance says bid, performance and payment bonds are not required for contracts below $100,000, citing § 39-1-1(e) and Act 2024-277. Its page concerns DCM’s oversight procedure and lists project classes in its jurisdiction; it is not a waiver of an owner’s separately requested contract bond. 3

Who Regulates Insurance in Alabama

Alabama Department of Insurance

The Alabama Department of Insurance oversees insurers and licensed producers, reviews insurance filings, and takes consumer complaints. Its online services page links directly to Alabama company and agent searches, licensing resources, and complaint filing. 4,5,6

Surplus-lines tax and stamping office

Reported tax rate: 6% of taxable surplus-lines premium Alabama’s 6% tax applies to surplus-lines premium when Alabama is the insured’s home state; until the state’s multistate compact clearinghouse is operational, Alabama guidance says 100% of the premium on a multistate policy is taxed here. Separately charged policy fees are taxable. Surplus-lines policies do not receive Alabama guaranty-fund protection if the insurer becomes insolvent. 7,8,10,9,13

  • Alabama's diligent-search rule has two exceptions: A broker generally must make diligent effort before a surplus-lines placement; Alabama guidance says three declinations satisfy it. For an exempt commercial purchaser, 15 U.S.C. § 8205 removes that search only after the broker discloses the admitted-market protection difference and the purchaser then requests placement in writing. 9,11,12

Providers With Documented State Licenses

These providers publish a national listing for Surety bonds; the state records document licenses for the entities and roles shown below. Some records rely on company-reported information rather than independent regulator verification. A national listing does not confirm the product is available in Alabama. Check the regulator’s license lookup and confirm state availability for your business when requesting a quote.

  • TechInsuranceSpecialty Program Group LLCInsurance producer · checked 2026-09-28TechInsurance’s current licensing page names Specialty Program Group LLC / SPG Insurance Solutions and lists state license numbers, but labels Rhode Island “Individual licenses” rather than identifying a license for the named agency. RI is omitted because this disclosure does not establish agency authority there; this is a search limitation, not an assertion that the company is unlicensed. The remaining state entries are company-reported and are not an insurance product availability map. 19

Questions to Ask Before You Buy in Alabama

  1. Does the awarding authority treat this work as public works under § 39-2-1(6), and what project funding or property facts support that classification?
  2. What exact performance and payment bond forms, penal sums, obligee names and delivery dates appear in the bid and award documents?
  3. Does the executed bond satisfy the owner’s form and filing instructions before work begins?
  4. What indemnity agreement, including any individual guarantees or collateral terms, would the surety require from the principal?

Surety Bonds in Alabama: FAQ

Who is the principal on an Alabama public-works bond? 1

The contractor entering the covered public-works contract owes the bonded performance and payment obligations. The awarding authority is the obligee for the performance bond, while the payment bond is for covered labor, material and supply claimants under the statutory form. 1

Does Alabama use the same bond amount for performance and payment? 1

No. The cited statute sets the performance bond at 100% of the contract price and the separate payment bond at no less than 50%. Confirm the final penal sums and obligee’s forms in the solicitation. 1

Who are the principal, obligee and surety on an Alabama public-works bond? 1

The awarded contractor is the principal; the awarding authority is the obligee for the performance bond. The surety guarantees the written obligations, while labor, material and supply claimants benefit from the payment bond. Check that the solicitation’s named obligee and forms match. 1

Surety Bonds in Other States

Other Coverage in Alabama

Sources

  1. Alabama Bid Law: Introduction to Public Works Law and Code of Alabama § 39-1-1. Alabama Legislative Services Agency; Chapter 10, pp. 104–105; Appendix C, § 39-1-1(a)–(b), printed pp. 200–201; § 39-2-1(6). Accessed 2026-09-28.
  2. State Competitive Bid Law: Public Works Law. Alabama Legislative Services Agency; Appendix B, Ala. Code § 39-1-1 and § 39-1-5; discussion of performance and payment bonds. Accessed 2026-09-28.
  3. Public Works Projects Costing $100,000.00 or Less. Alabama Department of Finance, Division of Construction Management; Sections on bid bonds and performance/payment bonds; citing Ala. Code § 39-1-1(e), Act 2024-277. Accessed 2026-09-28.
  4. Alabama Department of Insurance. Alabama Department of Insurance; Official agency homepage. Accessed 2026-09-28.
  5. Online Services. Alabama Department of Insurance; Links to Alabama company search, agent search, producer licensing, and consumer complaint services. Accessed 2026-09-28.
  6. File a Consumer Complaint. Alabama Department of Insurance; Official online complaint process. Accessed 2026-09-28.
  7. Code of Alabama § 27-10-31: Annual Tax of Surplus Line Brokers. Alabama Legislature; Six percent tax on direct surplus-lines premiums, less return premiums and excluding state or federal taxes. Accessed 2026-09-28.
  8. Surplus Line Broker FAQs. Alabama Department of Insurance; Page 2: per-policy fees are subject to the surplus-lines broker tax under § 27-10-31. Accessed 2026-09-28.
  9. Surplus Line Broker Requirements. Alabama Department of Insurance; Current broker licensing and diligent-effort placement requirements. Accessed 2026-09-28.
  10. Surplus Lines. National Association of Insurance Commissioners; Explains that state guaranty-fund protection available in the admitted market is not available for surplus-lines policies. Accessed 2026-09-28.
  11. Surplus Line Broker FAQs. Alabama Department of Insurance; FAQ: three declinations satisfy Alabama diligent effort; FAQ references 15 U.S.C. § 8205 as a separate exception. Accessed 2026-09-28.
  12. 15 U.S.C. § 8205: Streamlined application for commercial purchasers. U.S. House of Representatives, Office of the Law Revision Counsel; Broker's due-diligence search exception for an exempt commercial purchaser requires prior disclosure that admitted-market insurance may offer greater protection/regulatory oversight and the purchaser's subsequent written request for nonadmitted placement. Accessed 2026-09-28.
  13. Instructions for Multi-State Policies. Alabama Department of Insurance; Current instruction: until SLIMPACT clearinghouse is operational, if Alabama is home state of a multistate policy, 100% of premium is taxed at 6% and remitted to Alabama. Accessed 2026-09-28.
  14. Licenses. At-Bay; Current producer introduction and state table; At-Bay Insurance Services LLC; P&C and surplus-lines identifiers. Accessed 2026-09-21.
  15. Licenses and Carriers. Coalition; Licenses and Carriers, re-read 22 September 2026: Insurance Licenses table for Coalition Insurance Solutions, Inc., national producer number 18419475, with producer and surplus-lines numbers for all 50 states and DC including California 0L76155, Georgia 196479, Texas 2199630 and 2205589, Pennsylvania 815731 and 817452, Colorado 539028 and Wisconsin 3000108852. Insurance Carriers table naming, with NAIC numbers, Allianz Underwriters Insurance Company 36420, Arch Specialty Insurance Company 21199, Ascot Specialty Insurance Company 45055, Ascot Insurance Company 23752, Aspen Specialty Insurance Company 10717, Chaucer Insurance Company DAC, Coalition Insurance Company 29530, Fireman's Fund Indemnity Corporation 11380, Fortegra Specialty Insurance Company 16823, Lloyd's of London, MSIG Specialty Insurance USA Inc. 34886, MS Transverse Specialty Insurance Company 41807, Steadfast Insurance Company 26387, Vantage Risk Specialty Insurance Company 16275 and Zurich American Insurance Company 16535. Accessed 2026-09-22.
  16. Insurance Producer Licenses. Corgi Insurance; Current complete Insurance Producer Licenses table for Corgi Insurance Services, Inc.; 50 rows covering 49 states and DC (DC 3003091619); no New Mexico row; no NPN or as-of date shown. Accessed 2026-09-28.
  17. About Hiscox US Insurance. Hiscox; Hiscox Insurance Company Inc. NAIC 10200 as Chicago, IL domiciled insurer admitted or licensed in all 50 states and D.C.; Hiscox Inc. as general agent and Lloyd’s coverholder for Syndicates 33 and 3624; surplus-lines placements through licensed surplus-lines brokers; A.M. Best rating statement. Accessed 2026-09-16.
  18. Licenses. ERGO NEXT Insurance; Current entity-by-state license table reopened 28 September 2026: 50 rows under Next First Insurance Agency, Inc., including Washington, DC; New York rows instead list Next Insurance Services PC-1423070 and AP Intego BR-1198885. Accessed 2026-09-28.
  19. Insurance Licenses by State. TechInsurance; Current state table; identifies TechInsurance as a division of Specialty Program Group LLC d/b/a SPG Insurance Solutions; lists DC 3000041536 and labels Rhode Island “Individual licenses,” without an agency license number. Accessed 2026-09-28.
  20. Licenses. Vouch; Effective 16 January 2025: Vouch Specialty Insurance Services, LLC, NPN 19926463; P&C table (50 states and DC); surplus-lines table includes Idaho 870820; footnote says Georgia and Idaho do not issue agency-level surplus-lines licenses; Idaho retained as producer-only due to conflict. Accessed 2026-09-15.

Updated .

This guide is informational and does not determine whether a policy is available or meets your needs. Editorial policy. To suggest a correction, contact Spot with a supporting source.

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