Maine 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 Maine 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 Maine Construction Bond?

A contractor who fails to live up to regulatory and contractual obligations can cause a lot of financial harm to the project owner. Maine construction bonds protect project owners by requiring compliance with state construction laws and the terms of the construction contract. And if violations occur, the contractor (the bond’s “principal”) is legally obligated to compensate the project owner (the bond’s “obligee”).

What Types of Maine Construction Bonds May Be Needed?

In Maine, contractors are licensed locally, not at the state level. Obtaining a contractor license bond may be a prerequisite for local licensing. Maine’s “Little Miller Act” requires performance bonds and payment bonds for state-funded construction projects valued above $125,000. Private project owners may have similar performance and payment bonding requirements.

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

How Does a Maine Construction Bond Work?

There is a third party to a Maine construction bond, in addition to the obligee and the principal. This is the bond’s guarantor (known as the “surety”). The principal is legally obligated to pay valid claims against a construction bond. But as the guarantor, the surety will pay the claimant directly as an extension of credit to the principal. The principal must then repay the resulting debt in accordance with the surety’s credit terms, or the surety is likely to take legal action to recover the funds.

How Much Does It Cost?

The premium for a Maine construction bond is calculated using two factors: the bond amount and the premium rate. The obligee establishes the required bond amount, and the surety sets the premium rate. The premium rate is based on an assessment of the risk of not being reimbursed for claims paid on the principal’s behalf. The principal’s personal credit score is the best measure of that risk.

A high credit score correlates with a low risk to the surety and results in a low premium rate. A low credit score is a reliable sign of higher risk, which demands 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 Maine 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 Maine Construction Bond?

A contractor who fails to live up to regulatory and contractual obligations can cause a lot of financial harm to the project owner. Maine construction bonds protect project owners by requiring compliance with state construction laws and the terms of the construction contract. And if violations occur, the contractor (the bond’s “principal”) is legally obligated to compensate the project owner (the bond’s “obligee”).

 

In Maine, contractors are licensed locally, not at the state level. Obtaining a contractor license bond may be a prerequisite for local licensing. Maine’s “Little Miller Act” requires performance bonds and payment bonds for state-funded construction projects valued above $125,000. Private project owners may have similar performance and payment bonding requirements.

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

There is a third party to a Maine construction bond, in addition to the obligee and the principal. This is the bond’s guarantor (known as the “surety”). The principal is legally obligated to pay valid claims against a construction bond. But as the guarantor, the surety will pay the claimant directly as an extension of credit to the principal. The principal must then repay the resulting debt in accordance with the surety’s credit terms, or the surety is likely to take legal action to recover the funds.

The premium for a Maine construction bond is calculated using two factors: the bond amount and the premium rate. The obligee establishes the required bond amount, and the surety sets the premium rate. The premium rate is based on an assessment of the risk of not being reimbursed for claims paid on the principal’s behalf. The principal’s personal credit score is the best measure of that risk.

A high credit score correlates with a low risk to the surety and results in a low premium rate. A low credit score is a reliable sign of higher risk, which demands 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 Maine construction bond.