Contractor bonding
At SuretyBonds.com, our specialists strive to make the contractor bonding process not only quick and easy, but also engaging and error-free. Unlike other surety providers that complicate the process, we want our clients to understand how contractor bonds work. We believe the more our clients know about the product, the better prepared they'll be to buy or renew their contractor bonds. So, we've taken the time to answer some of the most common questions construction professionals ask us during the contractor bonding process.
How does contractor bonding work?
As a specific type of surety bond, each contractor license bond that's issued functions as a legally enforceable contract that binds together three separate parties.
- The contractor that buys the contractor bond acts as the principal.
- The state agency that requires the contractor to get the bond acts as the obligee.
- The company that financially backs the contractor bond acts as the surety.
If a contractor fails to fulfill the bond's terms, then the obligee can make a claim on the contractor bond as a way to gain compensation for any damages.
Who is protected by a contractor bond?
Construction professionals sometimes misunderstand the purpose of contractor bonding by assuming it protects themselves. Contractor surety bonds are not the same as insurance policies. Contractor bonds actually protect the general public by providing a financial guarantee that construction professionals will adhere to whatever stipulations are found within the bond's legal language. By getting a contractor bond, a construction professional agrees to work according to certain regulations, thus protecting government agencies and consumers from potential financial loss.
Who needs a contractor license bond?
Because contractor licensing laws vary by state, construction professionals should contact their state licensing board to determine whether they need a contractor license bond. Agencies can tell contractors exactly what contractor surety bond is needed and what it's penal sum should be.
How can I get a contractor bond?
SuretyBonds.com can place any contractor surety bond, even if an applicant is unsure of the exact bond required by the state. Construction professionals who are ready to begin the contractor bonding process can contact one of our many surety specialists in two quick and easy ways.
- Contact a specialist immediately at (800) 308-4358 between the hours of 8 am and 7 pm CST.
- Fill out an online form in fewer than two minutes at any time, and a specialist will contact you as soon as possible.
Contractors don't have to have a high credit score to qualify for a contractor license bond because SuretyBonds.com can approve virtually any applicant.
How much does contractor bonding cost?
One of biggest concerns construction professionals have regarding contractor bonding is how much they'll pay for their contractor bonds. Surety bond rates for contractor surety bonds vary depending on a few factors. The penal sum required by the state will have a large influence because premiums are calculated as a percentage of this amount. As a type of license and permit bond, contractor license bonds are generally considered low-risk, so qualified applicants receive rates that are typically 1 to 5% of the bond amount.
SuretyBonds.com works with a number of different markets, so our specialists will shop your bond to get find you the lowest rate available. Some surety providers require the entire bond premium to be paid upfront, but SuretyBonds.com offers premium financing options to qualified contractors.
Now that you know how contractor bonding works, let the specialists at SuretyBonds.com help you along your way!
