A bond rate in construction is the quoted rate that the surety bond you need is going to be priced at.
Here's how this works in the construction industry.
What is a Construction Surety Bond?
A construction surety bond is often required for these main reasons:
- Getting licensed in a state or city
- To win a project
- To hire subcontractors
- To release funds a project owner keeps as collateral
There are a lot of surety bonds in the construction industry but they all have the purpose to hold you accountable to the promises you make to your customers.
If you're unfamiliar with surety bonds, learn what it means to be bonded as a contractor and watch our video on contractor license bonds.
What is the Bond Rate for a Construction Bond?
Every surety bond is underwritten by a surety. A surety is a special type of insurance company or a division of an insurance company that deals with construction surety bonds.
Every surety bond is priced based on a rate quoted from the surety.
The surety determines this rate by looking at 3 primary factors:
- The personal credit of the owner or owners
- Construction experience and project experience
- The bond history of the owner or owners if they have been bonded before
From these factors, the surety quotes a bond rate unique to them.
This bond rate multiplied by the bond amount you're required to purchase is the price you'll pay to get your construction surety bond.
This is how every contractor and construction bond works.
Bottom line, the bond rate determines the price of the surety bond you're getting for your license or project.
Get Your Bond Pricing Today
You can get pricing for the contractor bond you need. Click the button below. You need to know the amount of your bond.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
Construction Bond Prices Can Be All Over The Board
Buying a surety bond in the construction space is similar to purchasing car insurance in that pricing can range all over the board.
Every surety is different when they quote rates and they are often vastly different.
On a daily basis we help contractors and construction companies get bonded. And every day we'll have rates come in 2% to 3% different and this can mean hundreds to many thousands of dollars in savings.
For example, let's say you needed a $50,000 surety bond for your construction project. Here's sample pricing from a rate that is really good to average.
Pay attention to how large the price difference can be.
| Bond Amount | Premium Rate | Total Cost |
|---|---|---|
| $50,000 | 0.05% | $250 |
| $50,000 | 1% | $500 |
| $50,000 | 2% | $1,000 |
| $50,000 | 3% | $1,500 |
| $50,000 | 4% | $2,000 |
Now imagine if you needed a bond that was over $100,000 which is common on large projects.
Get your bond pricing today by requesting a price quote or you can call a bond specialist at 1-800-608-9950.
Sometimes The Construction Bond Rate Doesn't Matter
This mainly applies to contractor license bonds, but it can apply to performance bonds as well.
Sometimes the surety doesn't need to see the credit of the owner to immediately approve a low rate for a surety bond.
This means you can get a low rate, typically around 1%, for your bond. A 1% rate in nearly every case is the lowest rate you can get.
Examples of contractor bonds like this can be found for:
Even some construction performance bonds can be instantly priced for low rates. This is rare, but we help contractors everyday get instant pricing for certain construction bonds.
Ready To Get Your Bond Rate For Your Construction Surety Bond?
We are Surety Bonds Direct, a specialized surety agent. It's our job to find our customers the lowest rate for the surety bond they need.
We price shop for you collecting rates from the highest A-rated sureties that specialize in contractor surety bonds.
Discover your bond rate by completing an online quote request or call a bond specialist today at 1-800-608-9950.
Get Your Bond Pricing Today
You can get pricing for the contractor bond you need. Click the button below. You need to know the amount of your bond.
Need Help? Call Us Today
Talk to a bond specialist today. They will help you find the surety bond you need and get you the lowest possible price. 1-800-608-9950
