Colorado 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 Colorado 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 Construction Bond?

Colorado contractors may be required to furnish project owners with certain construction surety bonds to protect them against the financial harm that can result from a contractor’s regulatory or contractual violation. 

What Types of Colorado Construction Bonds May Be Needed?

Colorado does not require contractors to be licensed at the state level, but some local jurisdictions do. In some cases, purchasing a contractor license bond is a prerequisite for licensure.

Additionally, Colorado’s Little Miller Act requires contractors working on certain state-funded projects to purchase both performance bonds and payment bonds. Many private project owners also require them. Bid bonds may be required when contractors are selected through competitive bidding. These are the most commonly required Colorado construction bonds, but both government contracting authorities and private project owners may require a contractor to furnish any of the following:

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

How Does a Colorado Construction Bond Work?

Colorado construction bonds are legally binding on all three parties to the surety bond agreement:

  • The obligee—the state or local contracting authority or private project owner requiring the bond
  • The principal—the contractor who must purchase the bond
  • The surety—the bond’s guarantor

The required bond amount—the maximum that will be paid on a valid claim—is established by the obligee. The surety’s guarantee that valid claims will be paid takes the form of an extension of credit to the principal for that purpose. The surety pays the claim initially and gives the principal a certain amount of time to repay that debt. The surety can sue a principal who fails to do so.

How Much Does It Cost?

The annual premium for a Colorado construction bond is calculated by multiplying two factors—the required bond amount and the premium rate. The premium rate is set by the surety based on the principal’s creditworthiness, which is a measure of the risk of not being repaid for claims paid on the principal’s behalf.

A high personal credit score means the risk of the surety not being repaid is low, which deserves a low premium rate. On the other hand, a low score signals higher risk, which calls for 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 Colorado 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 a Colorado Construction Bond?

Colorado contractors may be required to furnish project owners with certain construction surety bonds to protect them against the financial harm that can result from a contractor’s regulatory or contractual violation. 

Colorado does not require contractors to be licensed at the state level, but some local jurisdictions do. In some cases, purchasing a contractor license bond is a prerequisite for licensure.

Additionally, Colorado’s Little Miller Act requires contractors working on certain state-funded projects to purchase both performance bonds and payment bonds. Many private project owners also require them. Bid bonds may be required when contractors are selected through competitive bidding. These are the most commonly required Colorado construction bonds, but both government contracting authorities and private project owners may require a contractor to furnish any of the following:

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

Colorado construction bonds are legally binding on all three parties to the surety bond agreement:

  • The obligee—the state or local contracting authority or private project owner requiring the bond
  • The principal—the contractor who must purchase the bond
  • The surety—the bond’s guarantor

The required bond amount—the maximum that will be paid on a valid claim—is established by the obligee. The surety’s guarantee that valid claims will be paid takes the form of an extension of credit to the principal for that purpose. The surety pays the claim initially and gives the principal a certain amount of time to repay that debt. The surety can sue a principal who fails to do so.

The annual premium for a Colorado construction bond is calculated by multiplying two factors—the required bond amount and the premium rate. The premium rate is set by the surety based on the principal’s creditworthiness, which is a measure of the risk of not being repaid for claims paid on the principal’s behalf.

A high personal credit score means the risk of the surety not being repaid is low, which deserves a low premium rate. On the other hand, a low score signals higher risk, which calls for 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 a Colorado construction bond.