Florida Beach Renourishment Bonds
Learn everything you need to know about Florida beach renourishment bonds below, and contact Surety Bond Professionals today to request a quote.
What Is a Beach Renourishment Bond?
The beaches in several South Florida communities are targeted for renourishment (replenishment of sand) in 2020. The purpose is to repair beach erosion resulting from major storms and hurricanes in recent years and provide protection for coastal communities against future storms.
The renourishment projects are being funded in large part by the federal government, with the county responsible for matching a portion of the federal funds. With a total of nearly $18 million committed to the renourishment work, it’s important to ensure that the contractors selected for the various projects live up to their contractual obligations.
A Florida Beach Renourishment bond is a surety bond guaranteeing that the contractor who purchases it operates in a lawful and ethical manner, completing the work in accordance with the beach renourishment contract. Similar to performance and payment bonds in the construction industry, the bond protects the government’s investment and guarantees that workers, subcontractors, and suppliers are paid according to the terms of the beach renourishment contract.
Who Needs It?
Any contractor selected to carry out this federally funded beach renourishment work is required to purchase a beach renourishment bond.
How Does It Work?
There are three parties involved in the bond contract:
- The federal government is the obligee requiring the purchase of the bond
- The contractor, known as the principal, is the party required to purchase the bond
- The company issuing the bond is referred to as the surety
Each of these parties has specific responsibilities. A principal who violates any of the terms of the beach replenishment bond, such as defaulting on the contract, failing to pay workers, or using substandard materials, risks having a claim filed against the bond. If the surety determines that the claim is valid, the principal is legally responsible for paying it.
If the principal does not pay a claim in a timely manner, the surety typically will go ahead and pay it, but only as a courtesy to the claimant. Every surety bond contract includes a clause that indemnifies the surety against any responsibility for claim payments. Consequently, any payment made to a claimant by the surety is essentially a short-term loan to the principal, who is then legally required to reimburse the surety.
What Does It Cost?
The premium for a beach renourishment bond is a small percentage of the bond amount required by the obligee. The surety determines that percentage, the premium rate, based largely on the principal’s personal credit score. Those with good credit can expect a premium of 1-3% of the total bond amount.
Get Bonded Today
If you’re in the running for a Florida beach renourishment contract, contact Surety Bond Professionals today for help in obtaining the bond you’ll need.