Iowa 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 Iowa 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 Iowa Construction Bond?

Iowa construction bonds are designed to protect project owners and the public from the financial harm that can occur when contractors commit regulatory or contractual violations. The contractor (the bond’s “principal”) is held accountable for their unlawful or unethical actions and is legally obligated to pay any valid claim submitted by the project owner (the bond’s “obligee”) or other injured party.

What Types of Iowa Construction Bonds May Be Needed?

Iowa requires licensing of certain specialty contractors and registration of general and other contractors. In both cases, purchasing a contractor license bond is a prerequisite.

Iowa’s “Little Miller Act” requires performance bonds and payment bonds from contractors working on state-funded public works projects estimated to be above a certain threshold in terms of value. And bid bonds may be required in competitive bidding situations. Some local jurisdictions and owners of private construction projects also require bid, performance, and payment bonds. Iowa contractors may also need to purchase other bonds, depending on the type of work being done. These may include:

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

How Does an Iowa Construction Bond Work?

An Iowa construction bond is legally binding on the obligee and the principal. There is a third party as well—the bond’s guarantor (known as the “surety”). 

The principal is legally obligated to pay valid claims, but the surety guarantees payment by agreeing to lend the necessary funds to the principal. To resolve the claim quickly, the surety will pay the claimant directly, creating a debt that must be repaid by the principal. Failing to repay that debt in accordance with the surety’s credit terms can result in the surety suing the principal to recover the funds.

How Much Does It Cost?

The surety establishes the premium rate based on the risk of not being repaid by the principal. That risk is measured and assessed on the basis of the principal’s creditworthiness.

A person with a high credit score presents a low risk of non-repayment, so the premium rate will be low. A low credit score calls for a higher premium rate because of the greater risk.

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 Iowa 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 Iowa Construction Bond?

Iowa construction bonds are designed to protect project owners and the public from the financial harm that can occur when contractors commit regulatory or contractual violations. The contractor (the bond’s “principal”) is held accountable for their unlawful or unethical actions and is legally obligated to pay any valid claim submitted by the project owner (the bond’s “obligee”) or other injured party.

 

Iowa requires licensing of certain specialty contractors and registration of general and other contractors. In both cases, purchasing a contractor license bond is a prerequisite.

Iowa’s “Little Miller Act” requires performance bonds and payment bonds from contractors working on state-funded public works projects estimated to be above a certain threshold in terms of value. And bid bonds may be required in competitive bidding situations. Some local jurisdictions and owners of private construction projects also require bid, performance, and payment bonds. Iowa contractors may also need to purchase other bonds, depending on the type of work being done. These may include:

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

An Iowa construction bond is legally binding on the obligee and the principal. There is a third party as well—the bond’s guarantor (known as the “surety”). 

The principal is legally obligated to pay valid claims, but the surety guarantees payment by agreeing to lend the necessary funds to the principal. To resolve the claim quickly, the surety will pay the claimant directly, creating a debt that must be repaid by the principal. Failing to repay that debt in accordance with the surety’s credit terms can result in the surety suing the principal to recover the funds.

The surety establishes the premium rate based on the risk of not being repaid by the principal. That risk is measured and assessed on the basis of the principal’s creditworthiness.

A person with a high credit score presents a low risk of non-repayment, so the premium rate will be low. A low credit score calls for a higher premium rate because of the greater risk.

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 Iowa construction bond.