Idaho 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 Idaho 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?

Idaho construction bonds provide important protection for project owners and the public against financial losses resulting from a contractor’s regulatory or contractual violation. The injured party can obtain compensation for such a loss by filing a claim against the construction bond.

What Types of Idaho Construction Bonds May Be Needed?

In Idaho, certain types of contractors must be licensed at the state level, which may require the purchase of a contractor license bond. And some Idaho municipalities have their own licensing and bonding requirements.

Idaho’s “Public Contracts Bond Act,” the state’s version of the federal Miller Act, requires performance bonds and payment bonds for all state-funded public works projects regardless of their value. Some local jurisdictions and many private project owners have similar bonding requirements. Project owners that award contracts on the basis of competitive bidding may also require bid bonds.

In addition to these, the most common Idaho construction 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 an Idaho Construction Bond Work?

Every Idaho construction bond is a 3-way contract among the following parties, known as the:

  • Obligee—the government contracting authority or private project owner
  • Principal—the contractor required to furnish the bond
  • Surety—the bond’s guarantor

The legal obligation to pay valid claims against an Idaho construction bond rests entirely with the principal. However, the surety guarantees their payment by agreeing to lend the necessary funds to the principal if necessary. In practice, the surety will pay the claimant directly, drawing against a line of credit established for the principal. That payment creates a debt that must be repaid by the principal in accordance with the surety’s credit terms. Failing to repay the surety can result in the principal being sued to recover the funds.

How Much Does It Cost?

The annual premium for an Idaho construction bond is the result of multiplying the required bond amount by the premium rate, which the surety sets for each principal on a case-by-case basis. The premium rate is based on an assessment of the risk of the surety not being repaid for claims paid on behalf of the principal. The metric used for risk is the principal’s personal credit score.

The higher the credit score, the lower the risk and the lower the premium rate. On the other hand, a low credit score means the risk is higher, so the premium rate also will be higher.

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 Idaho 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 Construction Bond?

Idaho construction bonds provide important protection for project owners and the public against financial losses resulting from a contractor’s regulatory or contractual violation. The injured party can obtain compensation for such a loss by filing a claim against the construction bond.

 

In Idaho, certain types of contractors must be licensed at the state level, which may require the purchase of a contractor license bond. And some Idaho municipalities have their own licensing and bonding requirements.

Idaho’s “Public Contracts Bond Act,” the state’s version of the federal Miller Act, requires performance bonds and payment bonds for all state-funded public works projects regardless of their value. Some local jurisdictions and many private project owners have similar bonding requirements. Project owners that award contracts on the basis of competitive bidding may also require bid bonds.

In addition to these, the most common Idaho construction 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 Idaho construction bond is a 3-way contract among the following parties, known as the:

  • Obligee—the government contracting authority or private project owner
  • Principal—the contractor required to furnish the bond
  • Surety—the bond’s guarantor

The legal obligation to pay valid claims against an Idaho construction bond rests entirely with the principal. However, the surety guarantees their payment by agreeing to lend the necessary funds to the principal if necessary. In practice, the surety will pay the claimant directly, drawing against a line of credit established for the principal. That payment creates a debt that must be repaid by the principal in accordance with the surety’s credit terms. Failing to repay the surety can result in the principal being sued to recover the funds.

The annual premium for an Idaho construction bond is the result of multiplying the required bond amount by the premium rate, which the surety sets for each principal on a case-by-case basis. The premium rate is based on an assessment of the risk of the surety not being repaid for claims paid on behalf of the principal. The metric used for risk is the principal’s personal credit score.

The higher the credit score, the lower the risk and the lower the premium rate. On the other hand, a low credit score means the risk is higher, so the premium rate also will be higher.

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 an Idaho construction bond.