New York Construction Bonds

New York 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 New York Construction Bonds?

New York construction bonds are surety bonds that help maintain the integrity of the state’s construction industry by ensuring that contractors comply with both regulatory and contractual requirements. This helps prevent financial harm to the state, project owners, and the public resulting from contractor violations. When losses occur due to a contractor’s unlawful or unethical actions, the injured party can file a claim for monetary damages.

What New York Construction Bonds May Be Needed?

Some commonly required construction bonds in New York are:

These construction bonds may be required by public or private project owners, particularly for larger projects.

Other New York construction bonds that project owners may require include:

  • Contractor license bonds (local only)
  • Maintenance bonds
  • Subdivision improvement bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Do New York Construction Bonds Work?

Every New York construction bond is legally binding on the three parties to the surety bond agreement: the obligee, the principal, and the surety.

  • The obligee is the party requiring the bond,
  • The principal is the contractor required to furnish the bond, and
  • The surety is the party guaranteeing the payment of claims.

Although the principal is legally obligated to pay valid claims, the surety has agreed to extend credit to the principal to cover the claim amount. But the principal doesn’t pay the claimant directly; the surety does. If the principal does not repay the resulting debt, the surety can take legal action to recover the funds.

How Much Do They Cost?

Multiplying the required bond amount by the premium rate the surety sets through underwriting gives you the annual premium cost of a New York construction bond. The primary underwriting objective is to assess the risk of the surety not being repaid for claims paid on the principal’s behalf. The principal’s personal credit score is the metric used in the assessment of risk.

A high personal credit score is correlated with a low risk to the surety and results in a low premium rate. A low credit score is a red flag for high risk and results in 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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