Indiana 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 Indiana 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 an Indiana Construction Bond?

Indiana construction bonds are designed to protect project owners from the financial losses that can occur due to the unlawful or unethical actions and business practices of the contractors they hire. A contractor (the bond’s “principal”) who commits regulatory or contractual violations to the financial detriment of a project owner (the bond’s “obligee”) is held accountable and is legally obligated to pay any valid claim.

What Types of Indiana Construction Bonds May Be Needed?

There are no statewide license and bonding requirements for contractors in Indiana. However, some local jurisdictions do require certain types of contractors to be licensed, and purchasing a contractor license bond may be a prerequisite for licensure.

Indiana’s “Little Miller Act” requires bid bonds, performance bonds, and payment bonds from contractors working on state-funded public works projects estimated to be above $200,000 in value. Some local jurisdictions and owners of private construction projects also require bid, performance, and payment bonds. While these are the most common Indiana 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 Indiana Construction Bond Work?

There is a third party to an Indiana construction bond in addition to the obligee requiring the bond and the principal purchasing it. The “surety” is the bond’s guarantor.

Although the principal is legally obligated to pay valid claims, the surety guarantees payment by agreeing to extend credit to the principal. To ensure that the claim is resolved, the surety will pay the claimant directly to be reimbursed later. If the principal does not repay the debt in accordance with the surety’s credit terms, the surety can take legal action to recover the funds.

How Much Does It Cost?

The surety establishes the premium rate based on the risk the surety will take on in agreeing to extend credit to the principal. The primary risk is not being repaid for claims paid on behalf of the principal. That risk is measured using the principal’s personal credit score.

A high credit score is correlated with low risk, so the premium rate will also be low. A low credit score results in a higher premium rate because the risk to the surety is greater.

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 Indiana 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 an Indiana Construction Bond?

Indiana construction bonds are designed to protect project owners from the financial losses that can occur due to the unlawful or unethical actions and business practices of the contractors they hire. A contractor (the bond’s “principal”) who commits regulatory or contractual violations to the financial detriment of a project owner (the bond’s “obligee”) is held accountable and is legally obligated to pay any valid claim.

There are no statewide license and bonding requirements for contractors in Indiana. However, some local jurisdictions do require certain types of contractors to be licensed, and purchasing a contractor license bond may be a prerequisite for licensure.

Indiana’s “Little Miller Act” requires bid bonds, performance bonds, and payment bonds from contractors working on state-funded public works projects estimated to be above $200,000 in value. Some local jurisdictions and owners of private construction projects also require bid, performance, and payment bonds. While these are the most common Indiana 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

There is a third party to an Indiana construction bond in addition to the obligee requiring the bond and the principal purchasing it. The “surety” is the bond’s guarantor.

Although the principal is legally obligated to pay valid claims, the surety guarantees payment by agreeing to extend credit to the principal. To ensure that the claim is resolved, the surety will pay the claimant directly to be reimbursed later. If the principal does not repay the debt in accordance with the surety’s credit terms, the surety can take legal action to recover the funds.

The surety establishes the premium rate based on the risk the surety will take on in agreeing to extend credit to the principal. The primary risk is not being repaid for claims paid on behalf of the principal. That risk is measured using the principal’s personal credit score.

A high credit score is correlated with low risk, so the premium rate will also be low. A low credit score results in a higher premium rate because the risk to the surety is greater.

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 Indiana construction bond.