Hawaii 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 Hawaii 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 Hawaii Construction Bond?

Hawaii construction bonds provide a measure of protection for project owners and the public against the financial harm caused by a contractor’s regulatory or contractual violation. The injured party can be compensated for monetary damages by filing a claim against a construction bond furnished to the project owner by the contractor. 

What Types of Hawaii Construction Bonds May Be Needed?

Hawaii requires most types of construction contractors to be licensed at the state level, which may require the purchase of a contractor license bond. That decision is made on a case-by-case basis. Additionally, some municipalities may have their own licensing and bonding requirements.

Hawaii’s “Little Miller Act” mandates bid bonds, performance bonds, and payment bonds for most state-funded public works projects. Some local jurisdictions and many private project owners have similar bonding requirements. In addition to these, which are the most common Hawaii construction surety bonds, both public and private project owners may require others, such as:

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

How Does a Hawaii Construction Bond Work?

Every Hawaii construction bond is a legally binding contract among three parties, known as the:

  • Obligee—the state or local contracting authority or private project owner requiring the bond
  • Principal—the contractor who must purchase the bond
  • Surety—the party guaranteeing the payment of claims

The principal is legally obligated to pay valid claims against a construction bond, but the surety guarantees their payment by extending credit to the principal if necessary. In fact, the surety will pay the claimant directly, creating a debt that the principal must repay according to the surety’s credit terms. Not repaying it can result in legal action by the surety to recover the funds.

How Much Does It Cost?

The annual premium for a Hawaii construction bond is calculated by multiplying the bond amount (established by the obligee) by the premium rate (assigned by the surety on a case-by-case basis). The premium rate takes into account the risk of the surety not being repaid for claims paid on behalf of the principal. The measure of that risk is the principal’s personal credit score.

A high credit score means the risk of nonrepayment is low. A low credit score is a reliable sign of higher risk, which warrants 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 Hawaii 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 Hawaii Construction Bond?

Hawaii construction bonds provide a measure of protection for project owners and the public against the financial harm caused by a contractor’s regulatory or contractual violation. The injured party can be compensated for monetary damages by filing a claim against a construction bond furnished to the project owner by the contractor. 

 

Hawaii requires most types of construction contractors to be licensed at the state level, which may require the purchase of a contractor license bond. That decision is made on a case-by-case basis. Additionally, some municipalities may have their own licensing and bonding requirements.

Hawaii’s “Little Miller Act” mandates bid bonds, performance bonds, and payment bonds for most state-funded public works projects. Some local jurisdictions and many private project owners have similar bonding requirements. In addition to these, which are the most common Hawaii construction surety bonds, both public and private project owners may require others, such as:

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

Every Hawaii construction bond is a legally binding contract among three parties, known as the:

  • Obligee—the state or local contracting authority or private project owner requiring the bond
  • Principal—the contractor who must purchase the bond
  • Surety—the party guaranteeing the payment of claims

The principal is legally obligated to pay valid claims against a construction bond, but the surety guarantees their payment by extending credit to the principal if necessary. In fact, the surety will pay the claimant directly, creating a debt that the principal must repay according to the surety’s credit terms. Not repaying it can result in legal action by the surety to recover the funds.

The annual premium for a Hawaii construction bond is calculated by multiplying the bond amount (established by the obligee) by the premium rate (assigned by the surety on a case-by-case basis). The premium rate takes into account the risk of the surety not being repaid for claims paid on behalf of the principal. The measure of that risk is the principal’s personal credit score.

A high credit score means the risk of nonrepayment is low. A low credit score is a reliable sign of higher risk, which warrants 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 Hawaii construction bond.