Demo And Earth Moving Contractor Bonds
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What you need to know about Demo And Earth Moving Contractor Bonds
Excavation bonds (also known as earthmoving bonds) are legally binding agreements between three parties: contractors performing earthmoving activities, the government agency responsible for regulating local earthmoving activity, and a surety company.
The government agency is the Obligee and establishes the obligations that the contractor (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the contractor.
Demolition bonds are legally binding agreements between demolition contractors, the government agency responsible for regulating local demolition activity, and a surety company. The bonds ensure that demolition contractors follow state and municipal regulations during the demolition process and that the owner of the project is reimbursed if the contractor does not fulfill their contractual obligations.
Excavation bonds are required in some states for eligibility to obtain a permit to perform excavations. Most states handle excavation permits directly while some allow local municipalities to handle licensing and regulations.
When the surety company issues the bond, they provide the government agency a guarantee that they will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the excavation permit.
If the contractor fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The contractor is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Excavation surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for excavation bonds typically cost between 1% and 5% of the total bond amount. Most excavation bonds require credit checks. During the application process, the surety company evaluates your financial strength and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing an excavation bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for excavation surety bonds in popular states.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
