Arizona Contractor Bonds

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Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Arizona contractor bond needs.

What Are They?

Several different types of contractor bonds are typically required for contractors working in Arizona on either public or private projects. The most common of these are:

  • Contractor License Bonds. These guarantee compliance with applicable laws, rules, and regulations as specified in the contractor license bond agreement.
  • Bid Bonds. These guarantee that a contractor is serious about accepting the contract if chosen as the winning bidder. It also ensures that the contractor is able to obtain the performance and payment bonds that would be required at that point.
  • Performance bonds. These guarantee contract completion in accordance with the terms of the contract specifications.
  • Payment bonds. These guarantee that the contractor will pay all subcontractors, laborers, and suppliers in accordance with the payment arrangements outlined in the project contract.

Each of these bonds serve as the contractor’s pledge to operate in a lawful and ethical manner. They also ensure that funds will be available to compensate those harmed financially by the contractor’s failure to fulfill their obligations.

Who Needs Them?

While the state mandates bid bonds, performance bonds, and payment bonds for public works projects valued above a certain amount, private project owners may also impose similar bonding requirements. In addition, all residential and commercial general and specialty contractors must purchase a contractor license bond as a required step in the licensing process.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

How Do They Work?

Although the required bond amount and other details may vary by the type of contractor bond, all Arizona contractor bonds work in much the same way:

  • To ensure that funds will be available to pay valid claims against a contractor bond, the surety (the company underwriting and issuing the bond) establishes a line of credit for the principal (the contractor) that is equal to the bond amount, or penal sum, mandated by the obligee (the project owner).
  • When a claim is filed by a party who has incurred a financial loss due to the principal’s unlawful or unethical actions, the surety investigates to ensure its validity and may attempt to negotiate a settlement.
  • If no settlement is possible, the surety activates the principal’s bond line and pays the claim on behalf of the principal, creating a debt owed to the surety by the principal.
  • The principal repays the credit extended by the surety, typically in scheduled installments.

What Do They Cost?

The premium for an Arizona contractor bond is a small percentage of the bond’s penal sum as established by the obligee. Depending on the type of bond and the surety’s risk assessment, the key factors entering into the surety’s assignment of a premium rate include the principal’s personal credit score, business financials, industry experience, and prior claims history.

A principal perceived by the surety as creditworthy will pay a premium rate of anywhere between 1% and 3%.

Get a Quote

Our surety bond professionals will get you the Arizona contractor bond you need at a competitive rate.