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 the bond needs for mason contractors. See our construction bonds for more information.
Bonds may be needed for mason contractors to perform on federal, state, or municipal contracts. A bond is an additional financial safeguard and legal recourse that certain general contractors may also demand in the event that the mason breaches the terms of a contract or fails to pay subcontractors or suppliers.
While the specific types of bonds needed by masons can vary based on the specifics of their projects, some common types of bonds that masons may require include:
When evaluating bonding options, masons should prioritize several critical factors specific to their industry. Firstly, it’s essential to assess the bonding capacity, including both single project limits and aggregate bonding capacity, to ensure they can handle larger projects and support business growth effectively. This allows masons to have the financial backing necessary to fulfill their contractual obligations with confidence in the masonry industry.
Moreover, a higher bonding capacity offers increased flexibility when bidding on public works projects, enhancing competitiveness within the market.
Considering the cost of bonds, including the rating structures provided by surety companies, is vital. Opting for competitive rating structures can help minimize bond costs and improve the overall profitability of projects for masons.
Masons should also seek surety providers with a strong reputation for reliability and responsiveness within the masonry industry. By carefully evaluating these factors, masons can make informed decisions to secure the most suitable bonding arrangements for their business needs.
The premium the principal will pay to purchase or renew a mason’s bond is a small percentage of the bond amount. That percentage is the premium rate, which is set by the surety based on an assessment of the credit risk involved in guaranteeing the payment of claims. (Credit risk is the risk of a borrower not repaying a loan.)
In guaranteeing a mason’s bond, the surety agrees to extend credit to the principal if it becomes necessary to pay a valid claim. The standard practice is for the surety to pay the claim initially and then be repaid by the principal according to the credit terms established by the surety. The primary risk is that the principal might fail to repay the surety for a claim paid on the principal’s behalf.
Generally speaking, a well-qualified principal will be given a premium rate between 0.5% and 3%. The main factors influencing the premium rate are the principal’s creditworthiness, which is determined by their personal credit score, past experience, and business financials. A stronger underwriting case reduces the contractor’s risk, resulting in a less costly premium rate.
n the masonry industry, there are generally two methods to apply for a construction surety bond:
This is an application which is determined by the individual’s credit history. A Fast Track application can be used for projects or contracts under $600,000. The fast track application should be submitted with the following items:
This application is to establish a larger surety program for projects over $600,000. The Standard Bond Application will require:
Our surety bond professionals will help you grow your business by maximizing your surety capacity and flexibility. Call us today!