Paving Surety Bond
What is a Paving Bond?
A paving surety bond is a contract entered into by three parties who agree in writing to undertake a paving project. This surety bond serves the purpose of ensuring that all the involved parties, that is, the surety company, the contract performer (called the principal) and the beneficiary (the obligee) adhere to the requirements of the contract and that the work is carried out within the agreed timelines.
One of the requirements that should be met by construction firms is that they should have surety bonds before they commence work. This contract eliminates any chance that the contract will not be executed as precisely as it should be. Should the principal default on their promise, the obligee can initiate a claim process with the surety company.
Why is it Important?
It is a statutory requirement in many states that a contractor should have construction surety bonds before they can undertake any construction project, including a paving project. A Paving bond helps parties to a contract mitigate risk.
It lends a sense of credibility and trustworthiness to the contractor. Most people will certainly deny one business if they realize the person is clueless on surety bonds. The best Surety Bonds agencies do not just sell bonds; they are experts at what they do and will be more than happy to take you through surety bonds of all kinds, including paving surety bonds. That’s what we do! We bond with highly rated companies such as The Hanover Surety.
Types of Surety Bonds
Did you know that there are more than 50,000 surety bond types in the United States? Finding the precise type you need can be a little challenging. Surety bonds are a requirement when you want to perform public projects or large projects. The regulations relating to such requirements may differ from state to state. Be sure to confirm this with us dependable Surety Bonds agents. A common type of surety bonds in the United States is the Construction Surety Bond, and it has been dealt with above. Contact us to get Bonded Today! Learn what it means to be bonded. As always, we only bond with highly rated bonding companies.
Who Needs a Paving/Construction Bond?
Companies and other business organizations engaged in construction work will need to procure this bond. You will need it if you are a paving contractor. Suppose you want to bid for a paving contract with your local county council. Typically, you are required to obtain a surety bond from a reputable surety company and submit this document together with the rest of the bidding process’ documentation.
Why The Obligee Needs The Paving Surety Bond
The obligee understands the importance of working within the framework of a written contract. They want to be sure that the contractor will keep their end of the bargain. If the principal cannot complete the project for whatever reason, the surety company will have to pay the obligee the full amount of the value of the bond. This will help them hire a different contractor to finish up the work.
Cost of a Paving Surety Bond Premium
It is an annual payment and the amount payable is not fixed. The type of surety bond required, the specific state that requires it, the applicant’s credit score is some of the factors that determine the price. The credit score is the most important factor that determines how much the applicant will pay.
Paving contractors with a good score typically pay 0.75%-2.5% of the bond amount while those with bad credit usually pay between 2.5% and 10%. We will discuss with you and agree on the best rate about your specific situation.
Surety Bond Cost Saving Tips
Improving your credit score is the most effective way to bargain for a lower bond premium. This may not always be possible but you can:
- Provide financial statements that show you can repay potential claims.
- Improve your personal or business liquidity by collecting on debtors. Demonstrate a strong financial capability
- Showcase your level of experience on your resume and attach it to your application. More experienced applicants may pay less premium
- Apply for a U.S passport if you are not a citizen.
- Use the right surety bond agency. Work with Surety Bonds agents who work with many surety companies because this ensures that you get the most competitive rates in the market.
Where To Get These Construction/Paving Bonds
NFP Surety has been the industry leader in Paving and Construction Bonds. Contact us at (800) 863-3210, and request a free quote. We attentively listen to you to understand your specific need so that they can recommend the most suitable surety bond for your particular situation.
So Where Do You Start?
If you are uncertain about the type of bond you need, contact us today. We are an agency that works with several top-rated bond carriers including Travelers Surety, Chubb Surety, and Western National Surety. with several surety companies as this means that they can offer you some of the most attractive rates in the surety bond market. They should be able to work with you, even when your credit score is poor.
NFP Surety has been writing road construction surety bonds since 1984! We are the Paving Bond experts, so contact our office today! We appreciate your business.