Wisconsin 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 Wisconsin 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 Wisconsin Construction Bond?

Wisconsin construction bonds are designed to protect construction project owners against financial loss by:

  • Setting high standards for the performance and business practices of contractors, and
  • Requiring the contractor to compensate a project owner with a valid claim for monetary damages caused by the contractor’s regulatory or contractual violation(s).

What Types of Wisconsin Construction Bonds May Be Needed?

Although no bond is required from contractors seeking licensure at the state level, some municipal or county authorities that require a local contractor license or permit may also require a contractor license bond. 

Wisconsin’s “Little Miller Act” requires both performance bonds and payment bonds from contractors as a prerequisite for signing a contract for a public works or other projects funded by the state when the project value exceeds a certain dollar amount. Private construction projects don’t fall under the Little Miller Act. However, many private project owners do require performance and payment bonds from their chosen contractors. And both private project owners and government contracting officials (state or local) have the option of requiring a bid bond from each contractor in competitive bidding situations.

Other construction bonds that a contractor operating in Wisconsin may need include:

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

How Does a Wisconsin Construction Bond Work?

There are three parties to any construction bond referred to in surety bond lingo as:

  • The obligee—the project owner requiring the bond,
  • The principal—the contractor purchasing the bond, and
  • The surety—the bond’s guarantor.

The principal is legally obligated to pay claims the surety determines to be valid. But as the bond;s guarantor, the surety has agreed to extend credit to the principal for that purpose. In fact, the usual practice is for the surety to pay a valid claim initially and then be repaid by the principal according to the surety’s credit terms. Failing to repay the surety exposes the principal to the strong likelihood of the surety taking legal action to recover the debt. 

How Much Does It Cost?

The annual premium for a Wisconsin construction bond is calculated by multiplying the bond amount by the premium rate assigned to each principal by the surety based on the perception of not being repaid for claims paid on the principal’s behalf. 

The premium rate is based largely on the principal’s personal credit score. The higher the credit score, the lower the risk, and low risk merits a low premium rate. Conversely, a credit-challenged principal with a low credit score presents a higher risk of the surety not being repaid, 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 Wisconsin 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 Wisconsin Construction Bond?

Wisconsin construction bonds are designed to protect construction project owners against financial loss by:

  • Setting high standards for the performance and business practices of contractors, and
  • Requiring the contractor to compensate a project owner with a valid claim for monetary damages caused by the contractor’s regulatory or contractual violation(s).

Although no bond is required from contractors seeking licensure at the state level, some municipal or county authorities that require a local contractor license or permit may also require a contractor license bond. 

Wisconsin’s “Little Miller Act” requires both performance bonds and payment bonds from contractors as a prerequisite for signing a contract for a public works or other projects funded by the state when the project value exceeds a certain dollar amount. Private construction projects don’t fall under the Little Miller Act. However, many private project owners do require performance and payment bonds from their chosen contractors. And both private project owners and government contracting officials (state or local) have the option of requiring a bid bond from each contractor in competitive bidding situations.

Other construction bonds that a contractor operating in Wisconsin may need include:

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

There are three parties to any construction bond referred to in surety bond lingo as:

  • The obligee—the project owner requiring the bond,
  • The principal—the contractor purchasing the bond, and
  • The surety—the bond’s guarantor.

The principal is legally obligated to pay claims the surety determines to be valid. But as the bond;s guarantor, the surety has agreed to extend credit to the principal for that purpose. In fact, the usual practice is for the surety to pay a valid claim initially and then be repaid by the principal according to the surety’s credit terms. Failing to repay the surety exposes the principal to the strong likelihood of the surety taking legal action to recover the debt. 

The annual premium for a Wisconsin construction bond is calculated by multiplying the bond amount by the premium rate assigned to each principal by the surety based on the perception of not being repaid for claims paid on the principal’s behalf. 

The premium rate is based largely on the principal’s personal credit score. The higher the credit score, the lower the risk, and low risk merits a low premium rate. Conversely, a credit-challenged principal with a low credit score presents a higher risk of the surety not being repaid, 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 Wisconsin construction bond.