Georgia 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 Georgia 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 Georgia Construction Bond?

Georgia construction bonds provide financial protection for project owners and the public. State or local government contracting authorities and private project owners. Project owners and, in some cases, other parties financially harmed by a contractor’s regulatory or contractual violation can file a claim for monetary damages. 

What Types of Georgia Construction Bonds May Be Needed?

Georgia requires general, residential, and some specialty contractors to be licensed at the state level, which may involve purchasing a contractor license bond as a guarantee of financial responsibility. Local jurisdictions may have their own licensing and bonding requirements.

Under Georgia’s “Little Miller Act,” public project owners (both state and municipal) can require performance bonds and payment bonds for taxpayer-funded construction projects of a certain size. When contracts are awarded through competitive bidding, the contracting authority may also require bid bonds when submitting a bid. Private project owners may also require bid bonds as well as performance and payment bonds. In addition to these, which are the most common Georgia construction surety bonds, both public and private project owners may require other construction surety bonds, such as:

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

How Does a Georgia Construction Bond Work?

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

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

The obligee establishes the required amount of the bond, also known as the bond’s “penal sum.” The principal is legally obligated to pay valid claims against a construction bond, but the surety guarantees their payment. The surety will pay a claim upon verifying its validity as an extension of credit to the principal. The principal must subsequently repay that amount according to the surety’s credit terms. If necessary, the surety can take legal action to recover the debt.

How Much Does It Cost?

The annual premium for a Georgia construction bond is a small percentage of the bond’s penal sum. It is calculated by multiplying the penal sum by the premium rate, which is set by the surety through underwriting. The premium rate will depend largely on the risk of the surety not being repaid for claims paid on behalf of the principal. The usual metric for risk is the principal’s personal credit score.

A high credit score results in a low premium rate because the risk of the surety not being repaid is low. A less creditworthy principal presents a 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 Georgia 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 Georgia Construction Bond?

Georgia construction bonds provide financial protection for project owners and the public. State or local government contracting authorities and private project owners. Project owners and, in some cases, other parties financially harmed by a contractor’s regulatory or contractual violation can file a claim for monetary damages. 

 

Georgia requires general, residential, and some specialty contractors to be licensed at the state level, which may involve purchasing a contractor license bond as a guarantee of financial responsibility. Local jurisdictions may have their own licensing and bonding requirements.

Under Georgia’s “Little Miller Act,” public project owners (both state and municipal) can require performance bonds and payment bonds for taxpayer-funded construction projects of a certain size. When contracts are awarded through competitive bidding, the contracting authority may also require bid bonds when submitting a bid. Private project owners may also require bid bonds as well as performance and payment bonds. In addition to these, which are the most common Georgia construction surety bonds, both public and private project owners may require other construction surety bonds, such as:

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

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

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

The obligee establishes the required amount of the bond, also known as the bond’s “penal sum.” The principal is legally obligated to pay valid claims against a construction bond, but the surety guarantees their payment. The surety will pay a claim upon verifying its validity as an extension of credit to the principal. The principal must subsequently repay that amount according to the surety’s credit terms. If necessary, the surety can take legal action to recover the debt.

The annual premium for a Georgia construction bond is a small percentage of the bond’s penal sum. It is calculated by multiplying the penal sum by the premium rate, which is set by the surety through underwriting. The premium rate will depend largely on the risk of the surety not being repaid for claims paid on behalf of the principal. The usual metric for risk is the principal’s personal credit score.

A high credit score results in a low premium rate because the risk of the surety not being repaid is low. A less creditworthy principal presents a 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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