Illinois Construction Surety Bond
Contractors and companies seeking work on construction projects in Illinois should prepare to get different types of surety bonds, collectively known as Illinois construction bonds. Learn all about these essential bonds below.
What is an Illinois Construction Bond?
An Illinois construction bond is a surety bond that holds the bonded party financially liable if they don't meet performance standards stipulated under the contract. It is a risk management tool that protects project owners from potentially enormous losses if a hired contractor:
- Fails to complete the contract
- Absconds with the funds
- Violates the law or regulations in how they do their work
For example, if a contractor does not complete work on time or up to quality standards, the other party that hired the contractor may file a claim against the bond seeking compensation for damages.
How Does a Construction Bond in Illinois Work?
Unlike insurance or loan agreements that exist between two parties, all surety bond agreements are legal contracts between three essential parties:
- Principal – The contractor required to obtain the construction bond
- Obligee – The government agency, company, or individual that requires the bond
- Surety – The insurance company that underwrites the bond
If a bonded construction contractor bypasses regulations in completing the work, this will violate the Illinois construction bond. If the bonded principal refuses to remedy the issue, the project owner can file a claim against the bond. At this point, the surety thoroughly investigates the claim. If the surety finds the claim is valid, they will pay the damages in full, up to the bond's total value. But if the claim cannot be proven, it will be dismissed. The principal is financially responsible for all claims paid and must repay the surety in full, with all applicable fees and penalties.
Who Needs an Illinois Construction Performance Bond?
Anyone required to get one as part of a construction contract. Bond requirements are usually clearly spelled out, but they can be confusing nonetheless. Viking Bond Service is here to help. Rely on our team to help you understand if, when, and in what way Illinois construction bond requirements apply to you.
How Much Do Illinois Construction Bonds Cost?
Surety bond costs depend on two things – the amount of the bond and your credit history. The premium is just a tiny percentage of the bond amount, typically between one and five percent. So, a $50,000 Illinois construction bond costs between $500 and $2,500, depending upon your credit score. The better your credit, the lower the premium you will be charged.
Illinois Construction Bond Requirements: Can I Get One With a Bad Credit?
When a surety company underwrites a bond, they take on some risk. The surety investigates all claims and pays those that are valid. So, ideally, a surety prefers to bond those who will always complete a contract in full, on time, on budget, and according to all applicable laws and regulations. The principal's credit history is the best guide for a surety to estimate how much risk they assume with the bond.
For this reason, some surety companies refuse to bond people with problematic credit. But at Viking Bond Service, we don't want financial misfortune in your past to limit your future opportunities. Our Bad Credit Surety Bond Program works with you to get you bonded for the lowest possible price.
Do You Need to Renew an Illinois Construction Bond?
Bonds are a big part of the construction industry and an essential consideration for any contractor or construction company. Construction bonds are tied to contracts which typically state a timeframe for job completion. While the bond does not renew, additional premium could be charged for the job running past the stated completion timeframe. Additional premium will be charged for increased contract amounts as well. Construction bonds are tied to the contract so increases in the contract amount after the initial bond is issued are still covered by the bond.
How Can I Get an Illinois Construction Bond?
At Viking Bond Service, we strive to make obtaining a surety bond simple. To get started with your Illinois construction bond, call us at 1-888-2-SURETY (1-888-278-7389) or complete the contact form on the page to get in touch with one of our construction bond experts. We can determine the path that best suits your specific bond request to get you the best terms. We look forward to helping you get your next bond.
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