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 your Idaho construction bond needs.
What Are They?
The most commonly required construction bonds in Idaho are performance bonds, payment bonds and bid bonds. These three types of construction bonds are mandated by the Public Contracts Bond Act, the state’s equivalent of the federal Miller Act. Also known as Idaho’s “Little Miller Act,” the Public Contracts Bond Act requires contractors to purchase performance and payment bonds in order to be awarded a public works contract.
An Idaho performance bond is a contractor’s guarantee to complete a project in compliance with all contract terms and specifications. An Idaho payment bond guarantees that the contractor will pay all subcontractors, laborers, and suppliers of materials as specified in the project contract.
Both performance and payment bonds provide financial protection for the project owner in the event that the contractor violates the terms of the surety bond contract. A performance bond provides funds for the project owner to ensure completion of the project if the original contractor becomes insolvent or defaults for any other reason. A payment bond provides the obligee protection for nonpayment of labor and/or materials costs by compensating those to whom money is owed under the terms of the contract.
Some Construction Bonds for Idaho Are:
Who Needs Them?
Any contractor bidding on an Idaho public works contract of any size must purchase Idaho construction bonds—both performance and payment bonds—for 85% of the total contract value. It’s also becoming more common for private project owners to require performance and payment bonds as well.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement for an Idaho construction bond joins together these three parties in a legally binding contract:
- The project owner requiring the bond is the “obligee.”
- The contractor purchasing the bond is the “principal.”
- The surety company underwriting and approving the bond is the “surety.”
When a claim is filed against an Idaho construction bond, the surety will investigate it to make sure that it’s valid, and then try to negotiate a settlement that is agreeable to all parties. If no settlement is forthcoming, the surety will go ahead and pay the claim on behalf of the principal, up to the full required amount of the bond (the bond’s penal sum). The principal is legally obligated to repay that debt to the surety.
What Do They Cost?
Idaho construction bonds are subject to underwriting. The surety has two main concerns: the likelihood of claims and the risk that the principal will not repay the surety readily for claims paid by the surety. Consequently, the main underwriting factors are the principal’s personal credit score, business financials, industry experience, and past claims history.
A well-qualified contractor with strong financials and industry experience will pay a premium rate in the standard market range of 1% to 3%. A contractor with lesser credit who is able to get bonded could pay a higher premium rate.
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Our surety bond professionals will get you the Idaho construction bond you need at a competitive rate.