Kansas Construction Bonds
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 construction bond needs.
What Are Kansas Construction Bonds?
Construction project owners risk losing a lot of money when their chosen contractors fail to operate in a lawful and ethical manner. A Kansas construction bond requires the contractor purchasing it (the bond’s “principal”) to comply with all applicable laws and building codes, which helps protect the project owner against financial losses. And, if a violation does occur, the bond gives the project owner a way to recover monetary damages.
What Kansas Construction Bonds May Be Needed?
Some commonly required construction bonds in Kansas are:
- Bid bonds
- Performance bonds
- Payment bonds
Construction bonds may be required by state and/or local contractor licensing bodies as well as by public or private project owners, particularly for larger projects. (The party requiring the bond is called the “obligee.”)
Other Kansas construction bonds that may be required include:
- Contractor license bonds
- Maintenance bonds
- Subdivision improvement bonds
- Solar decommissioning bonds
- Right of Way bonds
How Do Kansas Construction Bonds Work?
In addition to the obligee and the principal, there is a third party to every Kansas construction bond: the bond’s guarantor (the “surety”).
While the principal is legally obligated to pay valid claims, the surety guarantees that they will be paid. Therefore, the surety will pay the claim initially on the principal’s behalf. This creates a debt that the principal must then repay to the surety. Failing to do so will result in the surety taking legal action against the principal to recover the funds.
What Do They Cost?
Kansas construction bonds are sold for an annual premium. The premium cost is determined by multiplying the required bond amount and the premium rate. While the obligee establishes the bond amount, the surety assigns the premium rate for each bond based largely on the principal’s personal credit score.
A high personal credit score means the risk of the surety not being repaid for claims paid on the principal’s behalf is low, which results in a low premium rate. A low credit score strongly suggests a higher risk level, which warrants a higher premium rate.
A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.
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