Washington Construction 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 construction bond needs.

What Are They?

Washington construction bonds are key to maintaining public confidence in the state’s construction industry. They protect the interests of the state, project owners, and the public by:

  • Requiring contractors to operate in full compliance with the regulations and building codes governing construction within the state, and
  • Providing a way for those who have incurred financial losses due to a contractor’s regulatory or contractual noncompliance to recover financial damages.

What Washington Construction Bonds May Be Needed?

Some construction bonds—namely:

These bonds are required by law for certain projects funded by the state or by a municipal government entity. Private project owners may also require these bonds, particularly for larger projects.

Other Washington construction bonds that project owners may require include:

How Do They Work?

Each Washington construction bond is a legally binding contract among three parties: the obligee, the principal, and the surety. 

  • The obligee is the project owner or other party requiring the bond. 
  • The principal is the contractor purchasing the bond and is legally obligated to pay valid claims.
  • The surety is the bond’s guarantor and determines which claims are valid.

The usual practice is for the surety to pay the claimant directly as an extension of credit to the principal. The principal must then repay the surety or potentially face legal action by the surety to recover the debt.

What Do They Cost?

The principal will pay an annual premium determined by multiplying the required bond amount established by the obligee by the premium rate assigned by the surety through underwriting. The premium rate varies depending on the underwriting assessment of the risk that the principal won’t repay the surety for claims paid on the principal’s behalf. The risk metric used is the principal’s personal credit score. 

A principal with a high credit score presents little risk to the surety, resulting in a low premium rate. A principal with a low credit score, however, presents a bigger risk, which warrants a higher premium rate.

A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.

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Our surety bond professionals will help you grow your revenue by maximizing your surety capacity. Call us today!