Nevada Risk Management, Bonds & Insurance
Bonds and insurance shift construction risk in different ways, and Nevada requires coverage for a contractor's workers. This chapter covers surety bonds versus insurance and the industrial-insurance requirement.
Surety bonds versus insurance
A surety bond is a three-party guarantee among the principal (contractor), the obligee (the party protected), and the surety. If the surety pays a claim, the contractor must reimburse it. Insurance, by contrast, is a two-party contract that transfers the insured's own risk with no repayment obligation - a key distinction the exam tests.
Industrial insurance (workers' compensation)
Nevada requires employers, including contractors, to carry industrial insurance (workers' compensation) for their employees under NRS Chapter 616B. Proof of coverage is a condition of licensure, and working without it exposes the contractor to penalties and stop-work action.