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 HVAC contractors. See our construction bonds for more information.
HVAC contractors may be obligated to furnish bonds for municipal, state, or federal contracts. Some general contractors may also demand bonding as it offers additional financial security and recourse in case the HVAC contractor fails to meet the contract terms or compensate subcontractors/suppliers.
Although the particular kinds of bonds a HVAC company needs may differ based on the nature of their work, some frequent kinds of bonds HVAC companies may need include:
When HVAC companies are exploring bonding options, several key factors should be prioritized. Firstly, it’s crucial to assess 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 HVAC companies have the necessary financial backing to fulfill contractual obligations with confidence.
Furthermore, a higher bonding capacity offers increased flexibility when bidding on public works projects, enhancing competitiveness within the market. It’s also essential to consider the cost of construction bonds, including the rating structures provided by surety companies. Opting for competitive rating structures can help minimize bond costs, ultimately improving project profitability.
HVAC companies should also seek surety providers with a strong reputation. By carefully evaluating these factors, HVAC companies can make informed decisions to secure the most suitable bonding arrangement for their business needs.
The premium cost to purchase or renew an HVAC bond depends on the required bond amount and the premium rate.
The surety company sets the premium rate the HVAC company will pay. The main concern is the risk the surety takes in guaranteeing payment of claims. Essentially, the surety extends credit to the company when paying a valid claim and expects to be repaid later according to their credit terms. However, there’s a risk that the company might not be able to repay, so the surety carefully assesses their creditworthiness through factors like business financials, prior construction experience, and personal credit score.
Typically, the better the underwriting case, the lower the risk of the contractor, so the lower the premium rate. A well-qualified principal typically will be assigned a premium rate in the range of 0.5% to 3%.
In general, there are two methods for applying for a construction surety 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!