Wyoming Payment Bonds

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Surety Bond Professionals is a family owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your payment bond needs.  

What Are Wyoming Payment Bonds?  

Wyoming payment bonds are designed to protect construction project owners against the financial consequences of a contractor’s failure to pay subcontractors and/or suppliers. Specifically, they prevent the encumbrance of the owner’s property by mechanic’s liens. A payment bond protects the project owner (the “obligee”) by legally obligating the contractor (the “principal”) to pay the valid claims of subcontractors or suppliers. A third party (the “surety”) guarantees their payment.  

Who Needs Them?  

Wyoming’s Little Miller Act, the state’s version of the federal Miller Act, requires payment (and performance) bonds from contractors selected for public works projects that meet certain threshold criteria. (See the Wyoming Statutes §16-6-112.) In Wyoming, contractors must furnish a payment bond before they can begin working on state-funded projects valued in excess of $150,000. The payment bond amount must be equal to 100% of the contract price. The obligee will let you know what payment bond requirements apply to you.  

Private construction projects are not subject to Wyoming’s Little Miller Act. However, many private project owners choose to require payment bonds from their contractors as protection against mechanic’s liens.  

How Do Wyoming Payment Bonds Work?  

The surety’s guarantee to pay valid claims against a payment bond is actually an agreement to lend the principal the funds to pay them, if necessary. The normal practice is for the surety to pay the claim initially and then be reimbursed by the principal in accordance with the surety’s credit terms. Failing to repay the surety is likely to trigger legal debt recovery actions against the principal.  

How Much Do They Cost?  

The premium cost of a Wyoming payment bond is the product of multiplying the bond amount established by the obligee and the premium rate set by the surety. While the bond amount is tied to the contract price, the premium rate is based on an underwriting assessment of the credit risk—the risk of the surety not being repaid for the credit extended to the principal in paying a claim. The surety measures this credit risk by the principal’s personal credit score.  

A high credit score is viewed as proof of the principal’s financial responsibility and a low risk to the surety. Low risk makes a low premium rate appropriate. A low credit score, on the other hand, warrants a higher premium rate to offset the greater risk to the surety.  

A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.  

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