Wisconsin 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 Wisconsin Construction Bonds?

Wisconsin construction bonds protect against financial losses caused by contractors who fail to abide by state or local construction regulations or to live up to their contractual obligations. They do this by requiring contractors to operate lawfully. And when violations occur, they provide a way for financially injured parties to be compensated for monetary damages.

What Wisconsin Construction Bonds May Be Needed?

Some commonly required construction bonds in Wisconsin are:

  • Bid bonds
  • Performance bonds
  • Payment bonds

In some cases, specifically for larger public works projects, these construction bonds are mandated by law. Private project owners may also require them as a prerequisite for awarding contracts. Other Wisconsin construction bonds that project owners may require include:

  • Contractor license bonds (local only)
  • Maintenance bonds
  • Subdivision improvement bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Do Wisconsin Construction Bonds Work?

There are three parties to every Wisconsin construction bond: the obligee, the principal, and the surety.

  • The obligee is the party requiring the bond,
  • The principal is the contractor required to purchase the bond, and 
  • The surety is the bond’s guarantor.

The legal obligation to pay valid claims belongs solely to the principal. The surety is indemnified against any legal responsibility for paying claims. However, as the bond’s guarantor, the surety will pay a valid claim initially, which creates a debt that the principal must repay. 

How Much Do They Cost?

Wisconsin construction bonds are not an expensive proposition. They are sold for an annual premium that is only a small percentage of the required bond amount. It’s calculated by multiplying the required bond amount by the premium rate assigned by the surety on a case-by-case basis. 

The premium rate is based largely on the principal’s personal credit score, which is considered a reliable measure of the risk that the surety might not be repaid for claims paid on the principal’s behalf. 

Someone with a high credit score presents little risk to the surety, so the premium rate will be low. A low credit score is a red flag for higher risk, which means 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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