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 performance bond needs.
What Are Wyoming Performance Bonds?
Wyoming performance bonds protect construction project owners from the financial losses they can incur when a contractor fails to complete a job in accordance with legal and/or contractual requirements. In purchasing a performance bond, a contractor (the “principal”) purchasing a performance bond guarantees the project owner (the bond’s “obligee”) that the job will be completed lawfully and ethically and compensate the obligee for losses resulting from non-compliance.
Who Needs Them?
Wyoming’s “Little Miller Act,” the state’s version of the federal Miller Act, is found in the Wyoming Statutes, Title 6, Chapter 6, under “Public Works Bonds.” It establishes bonding requirements for state-funded construction projects. All state-funded construction projects valued in excess of $7,500, up to $100,000, require a performance bond in an amount equal to 100% of the project’s value. For projects valued at more than $100,000, the required performance bond amount is 50% of the project’s value.
While private construction projects don’t fall under Wyoming’s Little Miller Act, many private project owners require performance bonds from contractors, especially for higher-value jobs.
How Do Wyoming Performance Bonds Work?
The third party to a Wyoming performance bond, in addition to the obligee and the principal, is the bond’s guarantor, known as the “surety.” The surety’s guarantee that all valid claims will be paid is actually an agreement to extend credit to the principal for that purpose if necessary. In practice, the surety will pay a claim on the principal’s behalf. The principal must subsequently repay the resulting debt in accordance with the surety’s credit terms. The surety can initiate the legal debt recovery process if not repaid by the principal.
How Much Do They Cost?
The premium for a Wyoming performance bond is calculated by multiplying the bond amount by the premium rate. While the obligee establishes the bond amount based on the project value, the surety sets the premium rate based on underwriting. The main underwriting concern is credit risk—the risk of the principal not repaying the surety for credit extended in paying a claim on the principal’s behalf. Credit risk is measured by the principal’s personal credit score.
Someone with a high credit score is considered to be a low credit risk, so the surety will assign a low premium rate. The elevated credit risk indicated by a low credit score must be offset by a higher premium rate.
A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.
Call Us Today
Our surety bond professionals will help you grow your revenue by maximizing your surety capacity. Call us today!