NAICO surety bonds and the layer that sits on top.
Two products that both show up when a contract gets serious: the bond that lets you bid the job, and the excess layer the contract requires above your primary limits. Cribb Insurance Group is appointed with NAICO and places both for Arkansas businesses.
The short version
A surety bond is not insurance. It is a guarantee of your performance to somebody else, backed by your promise to pay the surety back. Excess coverage is insurance, and it does one job: it responds after an underlying limit has been used up.
They live on the same page because they arrive at the same moment. The contract lands, and it wants a bond and a limit above what you carry. Both take lead time, and neither is something to start the week of the bid.
Three parties, not two.
Almost every misunderstanding about bonds comes from treating them as a kind of insurance policy. They are structurally a different thing, and the structure explains everything else.
The principal
You. The party whose performance is being guaranteed, and the party who signs the indemnity and repays the surety if it pays out.
The obligee
The party requiring the bond and protected by it: a public owner, a general contractor, a licensing authority. The bond exists for their benefit.
The surety
The company standing behind you. It underwrites you the way a lender would, and it expects the losses it pays to come back rather than to stay paid.
The indemnity agreement
You will sign an indemnity, and on most closely held businesses it is signed personally as well as by the company. That is standard and it is the whole mechanism. Without it the product would be insurance, and it would be priced like insurance.
Which means it is a credit decision
A surety looks at financial statements, working capital, the shape of your balance sheet, your experience with work of this type and size, and how you have finished jobs before. That takes preparation, and preparation takes time.
The bonds a contractor actually meets.
- Bid bondBacks your bid. If you win the award and then decline it, the obligee is protected against the cost of going to the next bidder.
- Performance bondGuarantees you will complete the work according to the contract. This is the one that makes an owner comfortable handing a large job to a company they have not worked with.
- Payment bondGuarantees your subcontractors and suppliers are paid. On public work it matters enormously, because public property generally cannot be liened, which makes the bond the remedy for everybody below you on the job.
- License and permit bondsRequired by a licensing authority or a municipality as a condition of holding the license or pulling the permit, rather than by a project owner.
- Miscellaneous and court bondsA broad category covering everything from fiduciary obligations to bonds required in litigation. If somebody has asked you for a bond and it is not on this list, it probably lives here.
The rules on a public job are not the rules on a private one.
Public work in Arkansas runs on its own bond framework. The most consequential difference is that public property generally cannot be liened, so the payment bond is not a formality sitting alongside the lien remedy. It largely is the remedy.
That has a second-order effect worth knowing. A claim against a bond runs on a clock that starts at final payment on the contract, and it is short. It is also genuinely unsettled: Arkansas has carried bond deadlines in more than one place in the code, those sections have not always agreed with each other, and they have been amended. We are not going to print a number here that might be the wrong one. What we will say is that if you are owed money on a bonded public job, the window is measured in months rather than years, it is already running, and it is worth putting in front of a construction attorney early rather than late.
Five days is the whole window, so the relationship comes first
Under Ark. Code § 22-9-404, where a general contractor requires it, a subcontractor must provide the general with a payment and performance bond, or a cash bond, in a sum equal to the full amount of the subcontractor's bid on a portion of a public works contract. The section reaches the situation where the sub is the low responsible bidder for that portion, the state requires the general to list the sub in its bid, and the work value of the sub's bid is in excess of fifty thousand dollars. And then the timing: the subcontractor shall provide the bond to the general contractor within five days after the general awards the contract to the sub.
Five days. A surety relationship cannot be built in five days from nothing. Underwriting a new principal means financial statements, a work-in-progress schedule, references and an indemnity agreement, and that is a matter of weeks in the ordinary course. A contractor who wins an award and only then starts looking for a surety has already run out of time, and the practical result is not a late bond, it is a lost job.
There is a related point about the bond itself. Under Ark. Code § 22-9-403, the liability the statute imposes on a bond furnished by a public works contractor is deemed an integral part of that bond whether or not the bond document actually spells it out. The statutory obligation does not depend on the wording someone chose.
So the thing to do is unglamorous and it is entirely about sequence: get the surety relationship established while you are still deciding whether to bid, not after you have won. Bring us your financials and your work history and we will get you prequalified so that when the award lands, the five days are enough.
Ark. Code §§ 22-9-403 and 22-9-404. Summarized, with provisions not covered here. General information, not legal advice.
What to have ready.
Surety underwriting looks more like a bank credit file than an insurance application. These are the categories. What any individual surety will do with them is a conversation rather than a published rule.
Financial statements
Prepared consistently and prepared on time. How they are prepared matters as much as what they say, and the trend across years matters more than any single year.
Work in progress
A current schedule of jobs underway with contract amounts, costs to date and estimated costs to complete. This is the document sureties read most closely.
Experience with the work
Whether you have completed work of this type and this size before. A step up in scale is a different question from more of the same.
Character and continuity
Who runs the business, how long they have run it, and what happens to the company if that changes. Sureties care about succession more than most people expect.
Banking and credit
Your line of credit, your relationship with the bank, and the personal credit of the people signing the indemnity.
Capacity questions
How much a given surety will support on one job or in total is an underwriting answer, not a published one. Ask Cribby or call the office.
Excess coverage sits on something.
An excess or umbrella policy is not a separate pot of money you can reach into. It attaches above underlying coverage and responds once that underlying limit has been exhausted by a covered loss. Everything else follows from that.
- It requires underlying limits, and it names themThe excess policy states the underlying coverage and limits it expects to sit over. Letting an underlying limit drop below what the excess requires can leave the layer attached to nothing, which is a problem you find at the worst possible time.
- It usually sits over more than one policyGeneral liability, commercial auto, and the employers liability half of workers compensation are the common underlying coverages. A contract asking for umbrella over all three is asking the layer to attach to each.
- Following form is not automaticSome excess policies follow the terms of the underlying coverage; others carry their own terms and their own exclusions. Two policies described identically on a certificate can behave very differently when tested.
- Aggregates apply here tooAn excess layer normally carries its own aggregate, so it can be eroded across a policy period rather than resetting for each claim.
Because the layer depends on what is underneath it, excess is worth building at the same time as commercial auto and the liability program rather than bolted on afterward. Send us the contract requirement and we will check it against the form rather than against the certificate.
Both of these need feeding.
Surety and excess are the two lines most likely to be neglected between renewals, and both punish that quietly.
Keep the surety current
Send interim financials and an updated work-in-progress schedule on the schedule your surety asks for. A relationship that has been fed all year approves faster than one that goes quiet for eleven months.
Watch the underlying
If an underlying limit or coverage changes at renewal, the excess has to be looked at in the same breath. Tell us before a change is made rather than after it takes effect.
Bond requests and claims
Bond requests come through the Bentonville office, and lead time is the whole game. If a claim is made against a bond, or a payment dispute starts heading that direction, call us early.
For the wider picture, start with business insurance, or see how employee injury is handled under workers compensation.
Other NAICO lines.
NAICO overview
The carrier profile: what NAICO writes, how the appointment works, and where financial strength sits.
NAICO workers compensation
Class codes, experience modification, audit mechanics and the Arkansas coverage thresholds.
NAICO commercial auto
Liability, physical damage, hired and non-owned auto, and what Arkansas requires on a registered vehicle.
NAICO general liability
Completed operations, contract requirements and the Arkansas construction repose period.
NAICO property and inland marine
Building and contents values, contractors equipment, and coverage for tools in transit.
Surety and excess questions we get.
Is a surety bond the same thing as insurance?
What is the indemnity agreement I have to sign?
What are the main types of contract bond?
How long does a subcontractor have to produce a bond on an Arkansas public works job?
What does an excess or umbrella policy actually do?
Why does my contract ask for umbrella coverage over employers liability?
Cribb Insurance Group publishes carrier explainers, Arkansas coverage guidance and commercial insurance education. Add Cribb Insurance as a preferred source on Google.
Get prequalified before you need it.
Financial statements, a current work-in-progress schedule, your work history and whatever the contract is asking for. We will run it through NAICO and the rest of our commercial markets so the surety relationship exists before the award does.
Bentonville, AR 72713
NAICO and National American Insurance Company are marks of National American Insurance Company and are used here nominatively to identify a carrier Cribb Insurance Group is appointed with. Cribb Insurance Group Inc is an independent agency and is not affiliated with, endorsed by or acting on behalf of National American Insurance Company.
Descriptions on this page are general and simplified. Bond forms, coverage, availability, eligibility, terms and conditions vary by obligee, contract, class of business and state, and the actual bond or policy language controls in every case. Nothing here amends any bond or policy, creates coverage, or commits any surety to issue a bond.
Financial strength ratings are assigned by AM Best, are opinions about a company's ability to meet its insurance obligations rather than about claims handling or service, and can change at any time.
No premium figures, rate estimates, savings figures, bonding capacity figures or suggested limits are published on this page. The only dollar figure shown is a statutory threshold within the Arkansas code section cited. Surety and excess terms are developed from the individual account.
Arkansas statutory references are general information and not legal advice. Statutes are summarized, carry provisions this page does not cover, and may be amended. Deadlines for claims on public works bonds in particular have appeared in more than one part of the Arkansas code and have been amended, and no deadline figure is stated here for that reason. Consult a licensed Arkansas construction attorney about any bond claim, payment dispute or contract requirement.
Last reviewed August 2026.