Arkansas Construction Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Arkansas construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

What Is an Arkansas Construction Bond?

Contractors may be required to purchase one or more construction bonds for each project they bid on or are awarded. While there are a number of different types of construction bonds, they all provide protection for project owners. State or local government contracting authorities and private project owners, and in some cases, members of the public, can file a claim for monetary damages when a contractor’s regulatory or contractual violation causes them a financial loss. 

What Types of Arkansas Construction Bonds May Be Needed?

Arkansas requires certain contractors to be licensed at the state level, which entails purchasing a contractor license bond.

Under the state’s version of the federal Miller Act, both performance bonds and payment bonds are required for certain taxpayer-funded construction projects. When contractors are selected through competitive bidding, the contracting authority may also require bid bonds. It is not uncommon for private project owners to require bid bonds as well as performance and payment bonds. While these are the most common Arkansas construction surety bonds, both public and private project owners may require any of the following:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds
  • Contractor license bond

How Does an Arkansas Construction Bond Work?

Every Arkansas construction bond involves three parties, known as the:

  • Obligee—the contracting authority or private project owner requiring the bond
  • Principal—the contractor who must furnish the bond
  • Surety—the bond’s guarantor

The obligee sets the required bond amount, the maximum the principal is legally obligated to pay on a valid claim. The surety guarantees that valid claims will be paid but is indemnified against legal liability for them. The surety will pay a claim initially and give the principal some time to repay that debt. If not repaid, the surety can take the principal to court to recover the funds.

How Much Does It Cost?

The annual premium for an Arkansas construction bond is determined by multiplying the required bond amount by the premium rate set by the surety through underwriting. The primary underwriting concern is the risk of the surety not being repaid for claims paid on the principal’s behalf. This risk is assessed based on the principal’s personal credit score.

A principal with a high credit score is assigned a low premium rate because the risk of non-repayment is low. A less creditworthy principal is viewed as a higher risk, which results in a higher premium rate.

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Arkansas construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

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FREE CONSTRUCTION BOND QUOTE

What Is an Arkansas Construction Bond?

Contractors may be required to purchase one or more construction bonds for each project they bid on or are awarded. While there are a number of different types of construction bonds, they all provide protection for project owners. State or local government contracting authorities and private project owners, and in some cases, members of the public, can file a claim for monetary damages when a contractor’s regulatory or contractual violation causes them a financial loss. 

Arkansas requires certain contractors to be licensed at the state level, which entails purchasing a contractor license bond.

Under the state’s version of the federal Miller Act, both performance bonds and payment bonds are required for certain taxpayer-funded construction projects. When contractors are selected through competitive bidding, the contracting authority may also require bid bonds. It is not uncommon for private project owners to require bid bonds as well as performance and payment bonds. While these are the most common Arkansas construction surety bonds, both public and private project owners may require any of the following:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds
  • Contractor license bond

Every Arkansas construction bond involves three parties, known as the:

  • Obligee—the contracting authority or private project owner requiring the bond
  • Principal—the contractor who must furnish the bond
  • Surety—the bond’s guarantor

The obligee sets the required bond amount, the maximum the principal is legally obligated to pay on a valid claim. The surety guarantees that valid claims will be paid but is indemnified against legal liability for them. The surety will pay a claim initially and give the principal some time to repay that debt. If not repaid, the surety can take the principal to court to recover the funds.

The annual premium for an Arkansas construction bond is determined by multiplying the required bond amount by the premium rate set by the surety through underwriting. The primary underwriting concern is the risk of the surety not being repaid for claims paid on the principal’s behalf. This risk is assessed based on the principal’s personal credit score.

A principal with a high credit score is assigned a low premium rate because the risk of non-repayment is low. A less creditworthy principal is viewed as a higher risk, which results in a higher premium rate.

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

 

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Request a quote online or call today to speak with one of our surety bond experts about obtaining an Arkansas construction bond.