In most instances, contractors and construction professionals are required to carry surety bonds. When you need to get to work, you need a bond fast. We can help get you the contractor bonds that fit your needs, so you can focus on getting the job done and building your future.
Contactor Bonds
A surety bond is your word. When you obtain a contractor bond, you’re entering into a legal obligation that guarantees you’ll perform your work according to your contract while adhering to the rules and regulations of your contractor license.
License Bond
Specializing in bond markets, Rock 10 Insurance Services has a vast network of financial and insurance institutions that we shop for you to find the best deal on Contractor License Bonds. No matter if you’re a small business starting out, or just looking to renew with better rates, Rock 10 Insurance Services knows best.
Contractor License Bonds comprise of a surety company contract, in which a contractor agrees to comply with all California contractor licensing laws. This Contractor License Bond promises to the state of California that no problems will arise, or punitory or license repercussions will follow. Moreover, a surety bond is a “promise to pay” if obligations to uphold the contract are not reached, with regards to builders and contractors.
California requires that every contractor maintains a current contractor license bond, because they act as a shield for consumers. Contractor license bonds also help to protect employees from lost work or wages stemming from the contractor, not from a Worker’s Compensation clause. Contractor license bonds are enforced to help maintain equality between contractors looking to bypass certain state and local laws, thoroughly safeguarding consumers.
California contractors have two options when it comes to getting a new contractor’s license, or reestablish their existing one. You can put down a cash deposit for the contractor license bond, or you can pay in full.
Bid Bond
Contractor Bid Bonds are a guarantee put on bids in the contract process. When bids are awarded, contractor bid bonds make sure the business or person that put in that bid, can guarantee that bid price. This guarantee helps put security on a bid, as contractor bid bonds are required with contractor bids. Failure to enter into a contractor bid bond, even if you’re the highest bidder for a contract, negates your place, and security is relinquished.
Contractor Bid Bonds came into place to help bring some uniformity and reliability to the construction bid practice. Years ago, contractors would purposely underbid contracts, by presenting increasing low bids, to guarantee the contract be awarded to their business. After they were in contract, these contractors would find ways to increase the cost of the job, building up their profit line.
Nowadays, most large projects in California require bid bonds. Bid bonds also act as a way to prove the competency of the construction business; poor financials and shoddy businessman don’t take the time to bid bond if they’re going to be held accountable for increasing profit lines and revoking the contract. On the same lines, are also tied into bid bonds, because they are so closely related.
Additional Information on the Bidding Process
Prior to Opening Bidding, you may withdraw your bid and regain your security deposit. No problems retracting bid if bid is not awarded yet.
After the Opening Bid, you are contractually obligated to honor the bid, or you will incur a penalty (concede your security deposit). In very rare cases, you can try to prove an honest mistake in your bid, but there must be outlined evidence and not just negligence.
Contractor Bid Bonds can generally cost between 5%-20% of the full bid (typically they are in the 10% range). They use your credit score and financial information on the principal of the contract, to help speed along the bond application. The surety company requires financial insurance from the contractor placing the bid, in most cases.
Performance Bond
A Performance Bond is a type of contract bond that holds the contractor to the terms and conditions of the contract. When you win a contraction contract, you concurrently present a performance bond. Payment bonds and performance bonds are usually issued together in California, since they are very similar.
Performance Bonds usually cost between half a percent and up to 20%, depending on the contractor credit score. This variance depends on a few factors. A contractor with a good credit score might be in a free range of 0.5-5% of the bond. While some surety companies won’t work with bad credit, a larger fee of 10-20% of the bond, may be charged.
These Performance Bond fees help protect any monetary loss, if the contractor fails to build exactly what the client wants. Insurance on proper work done can help set the mind at ease, with satisfaction guaranteed. Keeping subcontractors and materials distributors paid and happy will keep your business paid and happy as well!
Payment Bond
Could you imagine the headache for a homeowner to have a job halted because of a material or labor issue? This is one of the reasons that Contractor Payment Bonds were formed. Rock 10 Insurance Services can provide you with exceptional bond market knowledge.
Contractor Payment Bonds sub-type of a contract bond. Contractor Payment Bonds are a promise to pay subcontractor, suppliers, and your workforce. Performance bonds and payment bonds are usually issued together, called a “Performance and Payment Bond”. They are most commonly bought during the bidding part of a construction proposal, by a contractor, and then submitted to the lead on the project. To guarantee that all subcontractors and laborers are paid on time and in full, as well as all other creditors, a payment bond helps to keep the flow of progress going.
With the latest recession, California surety companies saw substantial losses and many went bankrupt. Accordingly, strict rules were put in place to prevent high-risk individuals from entering the market. Claims can be made on the payment bond for breaking contract or slow/non-payment, and if deemed guilty, the managing surety company must promise payment up to the bond’s limit.
Rock 10 Insurance Services knows the latest bond changes to keep your business current, along with the different levels of protection your construction business might need. We can tailor-fit your business with our bond market solutions, while also getting you covered for Contractor General Liability Insurance at a price point that will make you happy. Please call us today for a fast an easy quote at 866-376-2510.