In Nebraska the state requires a 500,000 liability but almost every one carries 1-2 Million. Almost all contracts require that much. Most all local jurisdictions also require a performance bond in an ammount from 100,000 to 125,000. This bond is for those who will not or do not fix the inspectors write ups in a reasonable time. If necessary the city will get some one else to fix it and charge it to the bonding company. Then the go after thelicense of the permit holder. And the bonding company goes after the defaulter.
It is a way of making sure the write ups will be fixed. After all if you do not like the price you have to pay for not doing work up to code, you will realy hate the price you have to pay for some else to fix it, and the loss of license and the bonding companies fees and lawyers fees you will have to pay via court judgement.
It makes sure that what AHJ wrote up is fixed.
The AHJ will not iissue you permits if no bond is on file. Bonds typically cost 1% of face value eg 125,000 cost 125/yr.
We also have local jurisdictions that require the city to be listed as an also insured on your company insurance.
