surety bond type
Construction Surety Bonds
Construction surety bonds are essential for both public and private projects. They protect project owners, safeguard subcontractors and suppliers, and demonstrate a contractor’s credibility. Whether you need a bid bond, performance bond, payment bond, or warranty bond, these guarantees ensure that construction projects are completed fairly and successfully.
What are Construction Surety Bonds?
Construction bonds, also known as contract bonds, are a type of surety bond that guarantees a contractor will fulfill the terms of a construction contract. While contract bonds can apply in different industries, they are most commonly used in the construction sector, hence the term construction bonds.
Simply put, construction bonds provide assurance that a project owner (public or private) will be protected from financial losses if the contractor fails to complete the job as agreed.
Traditionally, construction surety bonds are required by government agencies for public projects, but more private companies are now using them to ensure accountability and reduce risk. Different types of construction bonds may be required at various stages of a project to guarantee compliance, performance, and payment.
For a quick overview, check out our Construction Bond Infographic that breaks down how construction bonds work.
Who needs Construction Surety Bonds?
- Contractors bidding on public projects (federal, state, or local)
- Private contractors working for developers or corporations that require bonds
- Subcontractors in certain large-scale projects
- Project owners who want to safeguard against financial risks
If you’re a contractor looking to grow your business, being bonded is often a requirement to qualify for larger and more lucrative projects.
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Learn the fundamentals of construction bonds with our expertly crafted guide. This eBook provides simple explanations, real-world examples, and key insights to help you understand bonding requirements with confidence.
How much do Construction Surety Bonds cost?
The cost of a construction surety bond (called the premium) typically ranges from 1% to 3% of the total contract value for contractors with good credit and strong financials. For higher-risk applicants, premiums may be higher.
Factors that influence the cost include:
- Contractor’s credit history and financial strength
- Size and scope of the project
- Type of bond required
- Past bonding history and claims record
Why are Construction Surety Bonds important?
Construction projects involve multiple parties, strict deadlines, and significant financial investments. A construction surety bond:
- Protects project owners against contractor default or non-performance
- Ensures subcontractors and suppliers are paid properly
- Builds trust between contractors, project owners, and stakeholders
- Helps contractors qualify for more projects by demonstrating reliability
In short, construction bonds provide a safety net that keeps projects on track and minimizes financial risks for everyone involved.
Steps to secure a Construction Surety Bond
We have prepared comprehensive steps to assist you in obtaining a construction bond. These guidelines are carefully designed to address the specific requirements and regulations associated with your project.
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1. Contact us and we’ll email you an application form.
Fill out the application form and email it back to us. You may also be asked to provide court documents related to the bond.
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2. Our underwriting team will evaluate your application.
Each bond has its own unique risk and our team will guide you through the process to get your bond approved.
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3. Pay for the bond premium and we’ll send the bond to you.
Make the payment for your bond and we’ll issue your surety bond to you immediately!
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