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Construction contractors are interested in satisfying surety bond requirements on the projects for which they compete as inexpensively as possible. A surety’s primary objective is to identify contractors that have the ability, resources, and tenacity required to complete the construction projects they propose to build. Thus most of the process of obtaining surety bonds is devoted to information about the contractor’s business. A secondary but necessary element in the process is to identify individual indemnitors who have sufficient assets to hold the surety harmless from any claims filed against the bonds.

Contractors’ Interests in Selecting a Surety
Contractors have a choice in selecting surety companies. Different sureties may charge the contractor a different premium rate, resulting in savings for the contractor. In addition, one surety may be willing to issue bonds with a higher dollar limit than another, and this can result in additional work for which the contractor can compete and perform. The contractor also has an interest in finding out the financial strength and experience of the surety. If a problem develops during the project, one surety might more readily choose to work with the contractor toward resolution than would another surety, perhaps avoiding a default. Contractors thus have an interest in inquiring into these issues before selecting a surety company. Call Aloha Insurance Services at (808) 334-0044 to discuss these and other important issues concerning your Bond requirements.

Where Bonds Are Available
A contractor can usually apply for and obtain construction surety bonds at the insurance broker it uses for business-related insurance policies. The broker probably has already obtained the necessary financial information from the contractor for casualty insurance purposes. The broker may even be the primary point of contact between the surety and the contractor. Aloha Insurance Services should be your first point of contact for all your Bonding needs.

Surety bond premiums usually are priced as a percentage of the penal sum of the bonds issued. The premium percentage rate may vary among surety companies and among different contractors. The largest, most financially secure contractors in the United States would pay the lowest bond premium. A typical contractor may pay a bond premium between one percent and five percent of the penal sum.

Portions courtesy of and © Insurance Information Institute ( Copyright © 2001-2020 Aloha Insurance Services, Inc. Kona HI All rights reserved.
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