Massachusetts 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 Massachusetts 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 Massachusetts Construction Bond?

Massachusetts construction bonds protect project owners against financial losses resulting from a contractor’s regulatory and/or contractual violation(s). The protection comes from the legal obligation of the contractor (the bond’s “principal”) to:

  1. abide by construction regulations and the terms of the construction contract, or
  2. compensate the project owner (the bond’s “obligee”) for monetary damages in the event of a violation that results in a financial loss.

What Types of Massachusetts Construction Bonds May Be Needed?

In Massachusetts, only certain types of contractors are licensed at the state level. Some municipalities may have their own licensing and bonding requirements. Purchasing a contractor license bond may be a prerequisite for state or local licensing. 

Massachusetts’s “Little Miller Act” requires performance bonds and payment bonds for most state-funded construction projects. It’s common for owners of larger private construction projects to require performance and payment bonds as well.

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 Massachusetts Construction Bond Work?

There is a third party to a Massachusetts construction bond in addition to the obligee and the principal. This is the bond’s guarantor (referred to as the “surety”). The legal obligation to pay valid claims belongs entirely to the principal, but the surety guarantees their payment. In fact, the surety will pay the claimant directly as an extension of credit that the principal must subsequently repay in accordance with the surety’s credit terms. Not repaying that debt can result in the principal being sued by the surety to recover the funds.

How Much Does It Cost?

Two factors go into calculating the premium for a Massachusetts construction bond—the bond amount established by the obligee and the premium rate assigned by the surety. The premium rate is based largely on the risk of the surety not being repaid 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 means the principal is financially responsible, so the risk to the surety is low, and the premium rate will be low as well. A low credit score, however, 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 Massachusetts 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 Massachusetts Construction Bond?

Massachusetts construction bonds protect project owners against financial losses resulting from a contractor’s regulatory and/or contractual violation(s). The protection comes from the legal obligation of the contractor (the bond’s “principal”) to:

  1. abide by construction regulations and the terms of the construction contract, or
  2. compensate the project owner (the bond’s “obligee”) for monetary damages in the event of a violation that results in a financial loss.

 

In Massachusetts, only certain types of contractors are licensed at the state level. Some municipalities may have their own licensing and bonding requirements. Purchasing a contractor license bond may be a prerequisite for state or local licensing. 

Massachusetts’s “Little Miller Act” requires performance bonds and payment bonds for most state-funded construction projects. It’s common for owners of larger private construction projects to require performance and payment bonds as well.

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

There is a third party to a Massachusetts construction bond in addition to the obligee and the principal. This is the bond’s guarantor (referred to as the “surety”). The legal obligation to pay valid claims belongs entirely to the principal, but the surety guarantees their payment. In fact, the surety will pay the claimant directly as an extension of credit that the principal must subsequently repay in accordance with the surety’s credit terms. Not repaying that debt can result in the principal being sued by the surety to recover the funds.

Two factors go into calculating the premium for a Massachusetts construction bond—the bond amount established by the obligee and the premium rate assigned by the surety. The premium rate is based largely on the risk of the surety not being repaid 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 means the principal is financially responsible, so the risk to the surety is low, and the premium rate will be low as well. A low credit score, however, 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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Request a quote online or call today to speak with one of our surety bond experts about obtaining a Massachusetts construction bond.