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Texas Construction Bond

Across Texas, public and private sector construction projects of all types require the contractors working on them to acquire different kinds of contract bonds, collectively known as Texas construction bonds. Read on to learn how they work and what that means for your business.

What is a Texas Construction Bond?

There are many different types of construction bonds in Texas. The most common are bid bonds, payment bonds, and performance bonds, but most aspects of a contractor's work can be bonded. In all cases, bonding holds a bonded party financially responsible for work that does not meet the mandates of the construction contract. When that happens, the bond makes the contractor liable for damages and provides a mechanism for the other party in the contract to seek compensation. By holding contractors accountable, Texas construction bonds provide an incentive to follow the mandates of a contract.

How do Construction Bonds in Texas work?

When a contractor misses deadlines, goes over budget, fails to pay suppliers, or doesn't meet any other requirement of a contract, the party harmed by that contractor may file a claim for damages against the bond. The surety company that issues the bond will automatically settle all valid claims, but they only guarantee payment. The bonded contractor has financial responsibility for all claims, so they must pay the surety back any amount it settles in addition to interest and fees.

Who should get Construction Bonds in Texas?

Anyone working on a public sector project will need one of these surety bonds, and most private sector projects require one as well. Obtaining the required bonds is the first step towards winning contracts for work, so it's important to seek out the necessary bonds as soon as the requirement becomes apparent. Get a quote for all the bonds you need within 24 hours from the team at Viking Bond Service.

Who are the parties involved in a Texas Construction Bond?

Surety bonds always involve three parties:

• Principal - The bonded contractor or construction company that accepts responsibility for all claims.
• Obligee - The party hiring a contractor or construction company that has the right to file claims against the bond.
• Surety - The company that issues the bond and guarantees payment. When the surety settles a claim, the principal must pay the surety back promptly and in full.

How much does a Construction Surety Bond in Texas cost?

Costs vary depending on the size of the bond and the bond seeker's credit. Bond costs (called premiums) are a small percentage of the total bond amount - eg. a $50,000 bond might cost less than $1,500. The surety determines the exact premium based on an applicant's credit score and financial history. Since applicants with bad credit pose a higher risk, they will pay more for construction bonds in Texas. Don't let bad credit work against you - count on Viking Bond Service to get more people approved.

How are claims handled for Texas Construction Bonds?

The surety investigates a claim to verify the details, then pays all claims that hold up under scrutiny. Since the bonded party (the contractor) has responsibility for all claims, they must pay the surety back any amount it settles, plus interest and fees. Under the terms of the bond agreement, the surety may use any legal means available to collect a debt from the principal.

How to apply for a Texas Construction Surety Bond?

It's a surprisingly simple process: speak to a contract bond expert at Viking Bond Service, complete the provided contract bond application, agree to a credit check, and provide a copy of the specific bond requirements. Some applicants will need to provide additional documentation at the discretion of the underwriters.

Viking Bond Service - Get a Quote in 24 Hours

Satisfy all your bonding requirements so you can get to work. We will work to gain the best terms for your bond request and you can expect to get a quote back in as little as 24 hours. If you have questions, call us at 1-888-278-7389 or use the contact form on this page.