Construction Bonds for Private Construction Projects
Construction bonds for private construction projects act as a security measure, ensuring that the project will be completed in accordance with the contract’s terms. These bonds protect project owners and investors from financial loss if the contractor fails to meet their obligations.
With over 75 years of experience and access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bonds for private construction projects.
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Learn more about construction bonds for private construction projects, or contact our experienced surety agents for assistance with any questions you may have.
Project owners, contractors, banks, and financial institutions involved in private construction projects often require construction bonds. These stakeholders seek assurance that the project will be completed in accordance with the terms set by the contract, minimizing financial risks and ensuring that subcontractors and suppliers are compensated.
While public projects mandate construction bonds under the Little Miller Act, private construction projects don’t fall under this legislation. However, bonds are increasingly common in private projects, especially higher-value projects or those involving significant financial investments to safeguard the interests of all parties involved.
By authorizing a construction bond, the surety is agreeing to extend credit to the principal to cover the cost of a claim if the principal is unable to pay it immediately. That carries the risk of not being repaid by the principal and having to take legal action to secure repayment.
The cost of a construction bond is determined by multiplying the bond amount by the premium rate. A strong credit score can lead to lower premium rates, typically ranging from 0.5% to 3% of the bond amount.