The cost of a site improvement bond can vary significantly and is impacted by several key factors, the bond amount required, the complexity of the project, the contractor’s experience, and the applicant’s credit score. Larger and more complicated projects will have higher premiums than smaller renovation projects. If an applicant has a good credit score, that could also result in lower premiums. For larger projects, the contractor's business and personal finances may be required for the surety company to access the financial state of the business.
Each surety company has its unique rating system, which means that rates can vary between each company. To ensure that our customers receive the most competitive rates available, we have established partnerships with over 10 different surety companies. We are committed to offering the best rates on the market. If you find a better quote elsewhere, please let us know, and we will do our best to beat it.
A site improvement bond is needed when working on projects that involve public structures like sidewalks, sewers, or public parks that already exist. Private owners may also require a site improvement bond to improve existing buildings on private property. Getting a building permit is also often required, so work will not be able to get started without one. Government entities and private owners will require a site improvement bond to ensure they have a financial guarantee from the surety company that this project will be completed correctly.
A site improvement bond is a three-party agreement. First, the contractor, also known as the Principal, is responsible for completing improvements that meet the specific standards and rules set by the state. The contractor is the one who purchases the bond. The bond is backed by a surety company that guarantees the contractor will complete the improvements according to the contract and comply with all the necessary state laws. The primary purpose of this bond is to protect the Obligee, who can be either the Project Owner or a Government Agency. It safeguards them from potential financial losses that may occur if the developer fails to complete the project as agreed upon or if any fraudulent or illegal activities are detected involving the developer during the project.
A site improvement bond can be purchased as quickly as the same day the application is started. The time it takes to get a site improvement bond depends on various factors, such as the bond's size, the project's complexity, and the speed of underwriting. Once you receive a quote for the bond, you can purchase it, and we’ll issue the bond, making the process relatively quick and straightforward.
The Obligee, the Project Owner, or a Government Agency can file a claim if the work hasn't been completed as specified in the contract or if there's evidence of fraudulent or illegal activity related to the project.
Following the claim being submitted, the surety company initiates an investigation to assess its validity. If the claim is found to be valid, the surety company pays out the claim amount up to the bond amount. It's important to understand that this process differs from insurance because the surety company will recoup the amount paid out for the claim from the principal. Meaning that the principal is liable if a valid claim is filed.
It’s extremely important to complete all projects according to the agreement and according to the building regulations to avoid any claims on a site improvement bond.
Site improvement and subdivision bonds seem very similar. However, their main difference comes from the type of work the contractor will do. Site improvement bonds are for construction upgrades on existing structures or public property. Site improvement bonds ensure that projects involving renovations or improvements to already-established buildings or public spaces adhere to regulations and contractual agreements. On the other hand, Subdivision Bonds are concerned with new construction projects, particularly those involving creating new buildings or residential developments. While both bonds serve as safeguards to ensure that construction projects proceed as planned and in compliance with the law, the critical difference is in the scope of their application: Site improvement bonds relate to enhancements of existing structures, whereas subdivision bonds are tied to the development of entirely new buildings or subdivisions.
A site improvement bond doesn’t have an expiration date like some other bonds because the bond is specific to the project and meant to ensure the completion of the project. The bond will be active as long as the project is incomplete. Until the project is completed according to the contract, the bond will remain active, and claims can be filed against the bond. Once the project is completed, the bond will become inactive because the obligations in the bond have been fulfilled.