Vermont 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 Vermont 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 Vermont Construction Bond?

Vermont construction bonds protect construction project owners against monetary losses caused by a contractor’s statutory and/or contractual violations. They do this in two ways:

  1. First, they mandate contractor compliance with applicable statutes as well as the construction contract.
  2. In the event of a violation, they also ensure that funds will be available to compensate the project owner or other injured party for the resulting monetary damages. 

What Types of Vermont Construction Bonds May Be Needed?

In Vermont, only electrical and plumbing contractors are licensed at the state level. Some municipalities license other types of contractors, which may carry a requirement for the purchase of a contractor license bond. 

Vermont’s “Little Miller Act,” the state’s version of the federal Miller Act, requires performance bonds and payment bonds for all state-funded projects in an amount equal to the project’s value. However, the bond requirement can be waived for projects valued at less than $100,000. Private construction projects are not subject to Vermont’s Little Miller Act. But, it’s common for private project owners to require performance and payment bonds from their contractors. Public and private project owners alike may require contractors competing for a job through competitive bidding to furnish a bid bond. 

Other construction bonds that contractors doing business in Vermont may need to purchase include:

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

How Does a Vermont Construction Bond Work?

There are three parties to every Vermont construction bond. These are the:

  • Project owner (the “obligee”),
  • Contractor (the “principal”), and
  • Guarantor (the “surety”)

The principal is legally obligated to pay valid claims. But the surety, having guaranteed the payment of claims, will pay the claimant directly, as an extension of credit to the principal. The principal must subsequently repay the resulting debt in accordance with the surety’s credit terms or risk the surety initiating legal debt recovery procedures.

How Much Does It Cost?

The premium for a Vermont construction bond is a small percentage of the required bond amount. The surety sets that percentage, the premium rate, for each bond through underwriting. The main underwriting factor is the risk of the surety not being repaid for the credit extended in paying claims on the principal’s behalf. That risk is measured by the principal’s personal credit score. 

A high credit score means the risk to the surety is low, which deserves a low premium rate. A lower credit score means the risk level is higher, which warrants 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 Vermont 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 Vermont Construction Bond?

Vermont construction bonds protect construction project owners against monetary losses caused by a contractor’s statutory and/or contractual violations. They do this in two ways:

  1. First, they mandate contractor compliance with applicable statutes as well as the construction contract.
  2. In the event of a violation, they also ensure that funds will be available to compensate the project owner or other injured party for the resulting monetary damages. 

In Vermont, only electrical and plumbing contractors are licensed at the state level. Some municipalities license other types of contractors, which may carry a requirement for the purchase of a contractor license bond. 

Vermont’s “Little Miller Act,” the state’s version of the federal Miller Act, requires performance bonds and payment bonds for all state-funded projects in an amount equal to the project’s value. However, the bond requirement can be waived for projects valued at less than $100,000. Private construction projects are not subject to Vermont’s Little Miller Act. But, it’s common for private project owners to require performance and payment bonds from their contractors. Public and private project owners alike may require contractors competing for a job through competitive bidding to furnish a bid bond. 

Other construction bonds that contractors doing business in Vermont may need to purchase include:

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

There are three parties to every Vermont construction bond. These are the:

  • Project owner (the “obligee”),
  • Contractor (the “principal”), and
  • Guarantor (the “surety”)

The principal is legally obligated to pay valid claims. But the surety, having guaranteed the payment of claims, will pay the claimant directly, as an extension of credit to the principal. The principal must subsequently repay the resulting debt in accordance with the surety’s credit terms or risk the surety initiating legal debt recovery procedures. 

The premium for a Vermont construction bond is a small percentage of the required bond amount. The surety sets that percentage, the premium rate, for each bond through underwriting. The main underwriting factor is the risk of the surety not being repaid for the credit extended in paying claims on the principal’s behalf. That risk is measured by the principal’s personal credit score. 

A high credit score means the risk to the surety is low, which deserves a low premium rate. A lower credit score means the risk level is higher, which warrants 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 Vermont construction bond.