Surety Bond Professionals is a family owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of the bond needs for excavation/demolition contractors. See our construction bonds for more information.
Clients or project managers may stipulate that hired excavation and demolition contractors be bonded with various bonds, particularly for significant or critical projects such as municipal, state, or federal contracts. Additionally, some general contractors may require bonding as it offers additional financial security and recourse if the contractor fails to meet contract terms or causes damages during excavation or demolition activities.
Excavation and demolition professionals may need a variety of bonds, some of which are common and may depend on the nature of their work. These bonds include the following:
A contractor must purchase a subdivision bond when working on upgrades for a local government’s projects. The bond guarantees that workers perform their responsibilities according to the terms mentioned in the bond. These bonds are sometimes referred to as site improvement bonds, completion bonds, or plat bonds. Read more
When examining bonding options, excavation and demolition companies should prioritize several critical factors. For instance, a higher bonding capacity offers increased flexibility when bidding on public works projects, enhancing competitiveness within the market. It’s also vital to evaluate the bonding capacity, including both single project limits and aggregate bonding capacity, to ensure the ability to handle larger projects and support sustained growth. This ensures the company has the necessary financial backing to fulfill contractual obligations with confidence.
Someone in this industry should also consider the cost of bonds, including the rating structures provided by surety companies. Opting for competitive rating structures can help minimize bond costs, ultimately improving project profitability.
Excavation and demolition companies should also seek surety providers with a strong reputation, like Surety Bond Professionals. By carefully assessing these factors, companies can make informed decisions to secure the most suitable bonding arrangements for their business needs.
The premium for any bond is the result of two figures: the bond amount and the premium rate. The obligee has established the required construction bond amount for the excavation/demolition company, and the surety assigns an appropriate premium rate to each applicant.
The premium rate is based on the surety’s credit risk exposure as measured by the company’s business financials, prior construction experience, and personal credit score. The surety will pay a valid claim as an extension of credit to the principal, who must then repay the resulting debt according to the surety’s credit terms. Credit risk is the risk of the borrower, the principal, not repaying the lender, the surety.
A stronger underwriting case results in lower risk for the contractor, leading to a reduced premium rate. Typically, a well-qualified principal will be offered a premium rate ranging from 0.5% to 3%.
Generally, there are two ways to apply for a construction-related bond:
This is an application which is determined by the individual’s credit history. A Fast Track application can be used for projects or contracts under $600,000. The fast track application should be submitted with the following items:
This application is to establish a larger surety program for projects over $600,000. The Standard Bond Application will require:
Our surety bond professionals will help you grow your business by maximizing your surety capacity and flexibility. Call us today!