Massachusetts Contractor License 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 Massachusetts contractor license 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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What Is a Contractor License Bond?

A Massachusetts contractor license bond is a type of surety bond that provides financial protection for a licensed contractor’s customers.

Who Needs One?

If you want to work as a general contractor in Massachusetts, you will need to obtain a Massachusetts Construction Supervisor license, which does not carry a bonding requirement. However, some local jurisdictions do require a surety bond as a condition for obtaining a local license or permit. For example, Braintree, Garner, and Westminster all require $5,000 contractor license bonds.

How Does a Contractor License Bond Work?

A Massachusetts contractor license bond brings together these three parties in a legally binding contract:

  • The municipality (the “obligee” requiring the bond),
  • The contractor (the “principal” required to purchase the bond), and
  • The bond’s guarantor (the “surety”).

If the principal does not comply with the applicable laws and regulations, causing the project owner to incur a financial loss, the project owner can file a claim for damages against the bond. The surety will investigate every claim to determine whether it is valid. If it is, the principal is legally obligated to pay it, up to the full bond amount.

In guaranteeing a contractor’s license bond, the surety is agreeing to lend the principal the amount needed to pay a claim, if necessary. But the surety doesn’t write a check to the principal. Payment is made directly to the claimant, and the principal has a certain length of time in which to repay the surety. The surety can take legal action against a principal who fails to repay the debt to the surety.

How Much Does It Cost?

Most surety bonds are sold for an annual premium that is a small percentage of the required bond amount (also known as the bond’s “penal sum”). The premium rate is established through an underwriting process that assesses the risk of the surety not being repaid for claims paid on behalf of the principal. The underwriters rely heavily on the principal’s personal credit score as a measure of that risk.

A high credit score strongly suggests that the risk to the surety is low, which results in a low premium rate. A low credit score suggests a higher risk to the surety, which usually results in a higher premium rate. A well qualified principal typically pays a premium rate that’s in the range of one to three percent.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Massachusetts contractor license 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 Contractor License Bond?

A Massachusetts contractor license bond is a type of surety bond that provides financial protection for a licensed contractor’s customers.

 

If you want to work as a general contractor in Massachusetts, you will need to obtain a Massachusetts Construction Supervisor license, which does not carry a bonding requirement. However, some local jurisdictions do require a surety bond as a condition for obtaining a local license or permit. For example, Braintree, Garner, and Westminster all require $5,000 contractor license bonds.

A Massachusetts contractor license bond brings together these three parties in a legally binding contract:

  • The municipality (the “obligee” requiring the bond),
  • The contractor (the “principal” required to purchase the bond), and
  • The bond’s guarantor (the “surety”).

If the principal does not comply with the applicable laws and regulations, causing the project owner to incur a financial loss, the project owner can file a claim for damages against the bond. The surety will investigate every claim to determine whether it is valid. If it is, the principal is legally obligated to pay it, up to the full bond amount.

In guaranteeing a contractor’s license bond, the surety is agreeing to lend the principle the amount needed to pay a claim, if necessary. But the surety doesn’t write a check to the principal. Payment is made directly to the claimant, and the principal has a certain length of time in which to repay the surety. The surety can take legal action against a principal who fails to repay the debt to the surety.

Most surety bonds are sold for an annual premium that is a small percentage of the required bond amount (also known as the bond’s “penal sum”). The premium rate is established through an underwriting process that assesses the risk of the surety not being repaid for claims paid on behalf of the principal. The underwriters rely heavily on the principal’s personal credit score as a measure of that risk.

A high credit score strongly suggests that the risk to the surety is low, which results in a low premium rate. A low credit score suggests a higher risk to the surety, which usually results in a higher premium rate. A well qualified principal typically pays a premium rate that’s in the range of one to three percent.

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