Virginia 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 Virginia 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 Virginia Construction Bond?

There are a number of different types of Virginia construction bonds, but they all have a common purpose—to protect project owners and the public from the financial losses that can occur when contractors commit regulatory or contractual violations. The contractor (referred to as the bond’s “principal”) is legally obligated to compensate the project owner (the bond’s “obligee”) or other injured party for any valid claim of monetary damages.

What Types of Virginia Construction Bonds May Be Needed?

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

Virginia’s “Little Miller Act” requires performance bonds and payment bonds from contractors working on taxpayer-funded construction projects estimated to be above $100,000 value. Additionally, bid bonds may be required when such contracts are awarded through competitive bidding. And some counties and municipalities, as well as the owners of private projects, may require bid, performance, and payment bonds. Virginia contractors may also have to furnish other construction 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 a Virginia Construction Bond Work?

Virginia construction bonds involve three parties—the obligee, the principal, and a third party, the “surety,” which is the bond’s guarantor. While the legal obligation to pay valid claims belongs entirely to the principal, the surety guarantees that they will be paid. That guarantee is in the form of an agreement to extend credit to the principal for the purpose of paying claims, if necessary. 

In practice, the surety will pay the claimant, which creates a debt that the principal must repay according to the surety’s credit terms. The surety can take legal action against a principal who fails to repay the debt.

How Much Does It Cost?

Two factors go into calculating the premium for a Virginia construction bond—the bond amount established by the obligee and the premium rate set by the surety. The premium rate is determined on the basis of risk, specifically the risk of the surety not being repaid for claims paid on the principal’s behalf. The primary measure of that risk is the principal’s personal credit score.

A high credit score means the risk of the surety not being repaid is low, resulting in a low premium rate. A low credit score indicates a higher risk level, which warrants a higher premium 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 Virginia 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.

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a Virginia Construction Bond?

There are a number of different types of Virginia construction bonds, but they all have a common purpose—to protect project owners and the public from the financial losses that can occur when contractors commit regulatory or contractual violations. The contractor (referred to as the bond’s “principal”) is legally obligated to compensate the project owner (the bond’s “obligee”) or other injured party for any valid claim of monetary damages.

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

Virginia’s “Little Miller Act” requires performance bonds and payment bonds from contractors working on taxpayer-funded construction projects estimated to be above $100,000 value. Additionally, bid bonds may be required when such contracts are awarded through competitive bidding. And some counties and municipalities, as well as the owners of private projects, may require bid, performance, and payment bonds. Virginia contractors may also have to furnish other construction 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

Virginia construction bonds involve three parties—the obligee, the principal, and a third party, the “surety,” which is the bond’s guarantor. While the legal obligation to pay valid claims belongs entirely to the principal, the surety guarantees that they will be paid. That guarantee is in the form of an agreement to extend credit to the principal for the purpose of paying claims, if necessary. 

In practice, the surety will pay the claimant, which creates a debt that the principal must repay according to the surety’s credit terms. The surety can take legal action against a principal who fails to repay the debt.

Two factors go into calculating the premium for a Virginia construction bond—the bond amount established by the obligee and the premium rate set by the surety. The premium rate is determined on the basis of risk, specifically the risk of the surety not being repaid for claims paid on the principal’s behalf. The primary measure of that risk is the principal’s personal credit score.

A high credit score means the risk of the surety not being repaid is low, resulting in a low premium rate. A low credit score indicates a higher risk level, which warrants a higher premium risk.

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

REQUEST A QUOTE

Request a quote online or call today to speak with one of our surety bond experts about obtaining a Virginia construction bond.