California 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 California 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 a California Construction Bond?

Contractors in California may be required to provide financial protection for project owners in the form of one or more construction surety bonds. Regardless of the specific type of construction bond, they all provide a way for the project owner or certain other injured parties to recoup monetary losses caused by a contractor’s regulatory or contractual violation. 

What Types of California Construction Bonds May Be Needed?

California requires certain contractors to be licensed at the state level. Purchasing a contractor license bond is a prerequisite for licensure.

Additionally, both performance bonds and payment bonds are mandated by the state for certain government-funded construction projects, as well as being required by many private project owners. Bid bonds may also be required when contractors are selected through competitive bidding. While these are the most common California construction bonds, both government contracting authorities 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 a California Construction Bond Work?

Every California construction bond is a legally binding contract among these three parties:

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

The obligee establishes the required bond amount (or “penal sum”), which is the maximum that will be paid on a valid claim. The surety guarantees that valid claims will be paid and will extend credit to the principal for that purpose. The surety will pay the claimant directly and set the terms for the principal to repay that debt. The surety can take legal action against the principal to collect the debt if that becomes necessary.

How Much Does It Cost?

The annual premium for a California construction bond is the product of multiplying the required bond amount by the premium rate. The premium rate is assigned by the surety based on the risk of not being repaid for claims paid on the principal’s behalf. This risk is assessed based on the principal’s creditworthiness.

A principal with a high personal credit score deserves a low premium rate because the risk is low. Conversely, a principal with a low score is a higher risk, which demands 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 California 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.

 

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a California Construction Bond?

Contractors in California may be required to provide financial protection for project owners in the form of one or more construction surety bonds. Regardless of the specific type of construction bond, they all provide a way for the project owner or certain other injured parties to recoup monetary losses caused by a contractor’s regulatory or contractual violation. 

 

California requires certain contractors to be licensed at the state level. Purchasing a contractor license bond is a prerequisite for licensure.

Additionally, both performance bonds and payment bonds are mandated by the state for certain government-funded construction projects, as well as being required by many private project owners. Bid bonds may also be required when contractors are selected through competitive bidding. While these are the most common California construction bonds, both government contracting authorities 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 California construction bond is a legally binding contract among these three parties:

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

The obligee establishes the required bond amount (or “penal sum”), which is the maximum that will be paid on a valid claim. The surety guarantees that valid claims will be paid and will extend credit to the principal for that purpose. The surety will pay the claimant directly and set the terms for the principal to repay that debt. The surety can take legal action against the principal to collect the debt if that becomes necessary.

The annual premium for a California construction bond is the product of multiplying the required bond amount by the premium rate. The premium rate is assigned by the surety based on the risk of not being repaid for claims paid on the principal’s behalf. This risk is assessed based on the principal’s creditworthiness.

A principal with a high personal credit score deserves a low premium rate because the risk is low. Conversely, a principal with a low score is a higher risk, which demands a higher premium rate.

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

 

REQUEST A QUOTE

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