Delaware 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 Delaware 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 Delaware Construction Bond?

Delaware construction bonds are intended to provide protection for state and local contracting authorities as well as private project owners and the public against financial losses caused by a contractor’s regulatory or contractual violations. 

What Types of Delaware Construction Bonds May Be Needed?

Delaware requires nonresident contractors to provide a contractor license bond in order to operate within the state, which carries a bonding requirement. Some municipalities have their own contractor licensing and bonding requirements.

Delaware’s Little Miller Act is the state’s version of the federal Miller Act. It requires both performance bonds and payment bonds from contractors awarded building or public works contracts of a certain size. Private project owners may also require performance and payment bonds.

When a contract is to be awarded through competitive bidding, bid bonds may be required by both public and private project owners. And both government and private project owners may require contractors to furnish any of the following construction bonds:

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

How Does a Delaware Construction Bond Work?

The three parties to every Delaware construction bond are the: 

  • Obligee—the contracting authority/project owner
  • Principal—the contractor
  • Surety—the bond’s guarantor

The obligee establishes the required bond amount (the bond’s “penal sum”). The obligation to pay valid claims up to that amount belongs solely to the principal. But the surety guarantees payment by paying a claim initially as an extension of credit to the principal. The principal then must repay the debt in accordance with the surety’s credit terms or risk the surety taking legal action to recover the funds.

How Much Does It Cost?

Multiplying the required bond amount by the premium rate yields the annual premium for a Delaware construction bond. The surety sets the premium rate through an assessment of the risk of the surety not being repaid for claims paid on the principal’s behalf. The principal’s personal credit score is used to measure that risk.

A high credit score indicates a low risk to the surety, resulting in a low premium rate. A low score means 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 Delaware 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 Delaware Construction Bond?

Delaware construction bonds are intended to provide protection for state and local contracting authorities as well as private project owners and the public against financial losses caused by a contractor’s regulatory or contractual violations. 

 

Delaware requires nonresident contractors to provide a contractor license bond in order to operate within the state, which carries a bonding requirement. Some municipalities have their own contractor licensing and bonding requirements.

Delaware’s Little Miller Act is the state’s version of the federal Miller Act. It requires both performance bonds and payment bonds from contractors awarded building or public works contracts of a certain size. Private project owners may also require performance and payment bonds.

When a contract is to be awarded through competitive bidding, bid bonds may be required by both public and private project owners. And both government and private project owners may require contractors to furnish any of the following construction bonds:

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

The three parties to every Delaware construction bond are the: 

  • Obligee—the contracting authority/project owner
  • Principal—the contractor
  • Surety—the bond’s guarantor

The obligee establishes the required bond amount (the bond’s “penal sum”). The obligation to pay valid claims up to that amount belongs solely to the principal. But the surety guarantees payment by paying a claim initially as an extension of credit to the principal. The principal then must repay the debt in accordance with the surety’s credit terms or risk the surety taking legal action to recover the funds.

Multiplying the required bond amount by the premium rate yields the annual premium for a Delaware construction bond. The surety sets the premium rate through an assessment of the risk of the surety not being repaid for claims paid on the principal’s behalf. The principal’s personal credit score is used to measure that risk.

A high credit score indicates a low risk to the surety, resulting in a low premium rate. A low score means 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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