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 Massachusetts construction bond needs.
What Are They?
Construction bonds are also referred to as contractor bonds. Contractors are required to purchase them as a prerequisite for doing certain types of work and working on certain types of contracts. While the specifics of each type of construction bond differ, in general, they serve two key purposes:
- They indemnify the state against liability for the unlawful or unethical actions of contractors that cause financial harm to consumers, subcontractors, workers, or suppliers.
- They provide the funds to compensate anyone with a valid claim for damages resulting from the contractor’s violation of the surety bond agreement.
Some Massachusetts construction bonds are required by the state’s version of the federal Miller Act, which requires the bonding of contractors working on public works projects above a certain value. Others are required by municipal governments. And, increasingly, some are required by private project owners.
Who Needs Them?
Different types of Massachusetts construction bonds are required for different projects depending on the project’s ownership, size, and kind of work involved. The most commonly required construction bonds are:
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
A consumer or other protected party (project owner, subcontractor, worker, supplier, etc.) who suffers a financial loss because of a contractor’s unlawful or unethical actions in violation of the surety bond agreement can file a claim against the contractor’s construction bond. If the surety company that issued the bond deems the claim to be valid and is unable to negotiate a mutually agreeable settlement, the company will go ahead and pay the claim. However, paying claims is the sole responsibility of the surety, which legally obligates the contractor to repay the surety company.
What Do They Cost?
The annual premium for any type of construction bond is a small percentage of the required bond amount, which is established by the state or local agency requiring the bond. The surety agency sets the premium rate for a given contractor based on the contractor’s personal credit score, personal and business financial strength, and experience in the industry.
The premium rate for a contractor with good credit and financial stability typically is in the range of 1% to 3%. Those with strong credit and CPA quality financials will usually be on the lower end of the range. Whereas those with lesser quality financials or less financial capacity may pay more for their bonds.
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You can count on our surety bond professionals to get you the Massachusetts contractor bond(s) you need with the most competitive terms.
