Connecticut Construction Bonds

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Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Connecticut contractor bond needs.

What Are They?

Several different types of surety bonds fall into the category of contractor bonds. The three most commonly required Connecticut contractor bonds are bid bonds, performance bonds, and payment bonds, all of which may be required if you work primarily on publicly-funded projects. Increasingly, private project owners are also requiring the same contractor bonds.

The project owner (the contractor bond’s “obligee”) establishes the bond’s required amount, also known as the “penal sum.”

Bid Bonds

It’s common for contractors bidding on public works projects to be required to provide a bid bond as a guarantee to do the following:

  • Move forward with the job if awarded the contract.
  • Purchase a performance bond and/or payment bond if required.

A bid bond prevents frivolous bids and protects the project owner against having to spend time and money choosing another contractor if the first choice backs out. It’s also a way to help ensure that the winning bidder will qualify for a performance or payment bond.

See more about Connecticut Bid Bonds here.

Performance Bonds

A performance bond is a contractor’s guarantee to complete a given project in accordance with the contract specifications, budget, and timeline. The bond provides a source of funds that the project owner can use to complete the project if the original contractor defaults on the contract or remediate work that does not meet contract specifications.

Payment Bonds

A payment bond is a contractor’s guarantee to pay all subcontractors and laborers for their work on the project and all suppliers for the materials they have provided. The bond ensures that funds will be available for compensating any of these parties who have not been paid by the contractor.

Who Needs Them?

In Connecticut, any contractor bidding on a state-funded contract over $100,000 is required to provide a bid bond, and if awarded the contract, a performance bond and payment bond. The required bond amount is usually equal to the total contract value. Some counties and municipalities have their own contractor bonding requirements.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

How Do They Work?

Any violation of the terms of a bid bond, performance bond, or payment bond that causes financial harm to the project owner (the “obligee” in the language of surety bonds) or a subcontractor, laborer, or supplier in the case of a payment bond, can result in a claim against the bond. The surety bond company (known simply as the “surety”) will determine whether the claim is valid and may then attempt to negotiate a settlement. The surety will notify the agent and the contractor, and all three parties will discuss the nature of the claim.

If the claim is to be paid, the surety will do it, even though the contractor (the bond’s “principal”) is legally responsible for paying claims. The surety makes the payment on behalf of the principal, who must then, by law, repay that debt to the surety.

What Do They Cost?

All Connecticut contractor bonds (other than a few required by local governments) are subject to underwriting. The premium rate will reflect the surety’s assessment of the risk involved in extending credit to the principal and will be based largely on the principal’s financials as well as personal credit score. For smaller bonds under $500,000, it is mostly dependent on personal and business credit score. While larger bonds require financials for underwriting. The premium rate for these bonds typically ranges from 1-3%. Principals who require many bonds and have strong financials may be on the lower end of this scale, whereas principals who simply need credit-based bonds may be on the higher end.

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Our surety bond professionals will get you the Connecticut contractor bonds you need at a competitive rate.