Basic Orlando Surety Bonds for Contractors
Surety Bonds are essential for many Orlando Commercial businesses, especially those in construction and land development industries. In our last post we discussed how the surety process works and what it means to be bonded. In this post, we would like to outline a few types of surety bonds that are most commonly encountered throughout the construction industry.
License Bond– One of the first type of surety bonds construction industry members will encounter are license bonds, which are often required by federal, state and local regulations in order for a contractor to legally attain a Florida license and operate on a commercial development project. Bond amount requirements will vary depending on your division. For example General Contractors require a $20,000 bond amount and at least a 660 FICO credit score at the time of application while Florida Construction Industry bonds must be attained in the amount of $100,000.
Bid bonds- While not all construction projects require bid bonds, they are required when bidding on federal and often state commercial construction projects. Project owners often request that bidders provide proof of these bonds to be submitted along with the financial proposals for the project. Bid bonds are essentially a guarantee from the contractor to the project owner that the contractor is capable of completing the job at the bid price.
Payment bonds– These bonds are also posted by contractors as proof of funds and financial stability to pay subcontractors and material suppliers. The Federal Miller Act requires these bonds of projects that cost $100,000 or more as well as any publically funded project. Payment bonds are closely associated with performance bonds.
Performance bonds– Performance bonds are designed to protect project owners from poor or incomplete project completion. The bonds are a guarantee that a contractor will fulfill the contract as outlined, in a timely manner and to the quality specifications detailed in the contract. Should the project owner not be satisfied upon completion, and the contractor be found liable, the surety company is ultimately responsible for reimbursing the project owner the full amount of the bond, and will often seek reimbursement from the contractor.
Attaining the right Orlando surety bonds is essential for contractors. At Newman Crane, we can help. Our surety specialists work closely with many local contractors and other business owners, to help them set up Orlando Contractor bonds that are carefully designed to cover their specific exposures. We are proud to offer a complete portfolio of bonding and Orlando business insurance solutions to operations throughout Central Florida. For more information, give our Orlando Surety Bond specialists a call today at (407) 859-3691.