Louisiana 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 Louisiana 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 Louisiana Construction Bond?

A regulatory or contractual violation by a contractor can cause the project owner to experience a financial loss. Louisiana construction bonds help prevent such violations, and when they do occur, construction bonds provide a way to ensure the project owner (known as the bond’s “obligee”) is compensated for monetary damages. The contractor (the bond’s “principal”) is legally obligated to pay any valid claim.

What Types of Louisiana Construction Bonds May Be Needed?

There is no statewide licensing and bonding requirement in Louisiana, but contractor license bonds may be required by certain local jurisdictions. Louisiana’s “Little Miller Act” requires bid bonds, performance bonds and payment bonds for public and private construction projects valued above $5,000. However, bond requirements may be waived for projects under $50,000. 

Other construction bonds that may be required by both public and private project owners include:

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

How Does a Louisiana Construction Bond Work?

The third party to a Louisiana construction bond, in addition to the obligee and the principal, is the bond’s guarantor (referred to as the “surety”).

Although the legal obligation to pay valid claims belongs entirely to the principal, the surety guarantees their payment by extending credit to the principal for the purpose of claims payment. The surety will pay a valid claim initially on the principal’s behalf. The principal must then repay the resulting debt according to the surety’s credit terms. Non-repayment can lead to the surety taking legal action to recover the funds.

How Much Does It Cost?

The premium for a Louisiana construction bond is the product of multiplying two factors: the bond amount and the premium rate. The surety assigns each principal a premium rate that reflects the risk of not being repaid for claims paid on the principal’s behalf. That risk is measured by the principal’s personal credit score.

A high credit score indicates that the risk to the surety is low, which deserves a low premium rate. A low credit score signals 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 Louisiana 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 Louisiana Construction Bond?

A regulatory or contractual violation by a contractor can cause the project owner to experience a financial loss. Louisiana construction bonds help prevent such violations, and when they do occur, construction bonds provide a way to ensure the project owner (known as the bond’s “obligee”) is compensated for monetary damages. The contractor (the bond’s “principal”) is legally obligated to pay any valid claim.

There is no statewide licensing and bonding requirement in Louisiana, but contractor license bonds may be required by certain local jurisdictions. Louisiana’s “Little Miller Act” requires bid bonds, performance bonds and payment bonds for public and private construction projects valued above $5,000. However, bond requirements may be waived for projects under $50,000. 

Other construction bonds that may be required by both public and private project owners include:

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

The third party to a Louisiana construction bond, in addition to the obligee and the principal, is the bond’s guarantor (referred to as the “surety”).

Although the legal obligation to pay valid claims belongs entirely to the principal, the surety guarantees their payment by extending credit to the principal for the purpose of claims payment. The surety will pay a valid claim initially on the principal’s behalf. The principal must then repay the resulting debt according to the surety’s credit terms. Non-repayment can lead to the surety taking legal action to recover the funds.

The premium for a Louisiana construction bond is the product of multiplying two factors: the bond amount and the premium rate. The surety assigns each principal a premium rate that reflects the risk of not being repaid for claims paid on the principal’s behalf. That risk is measured by the principal’s personal credit score.

A high credit score indicates that the risk to the surety is low, which deserves a low premium rate. A low credit score signals 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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