Contract Surety Bonds
Attention Contractors
It is difficult for us to prove whether or not we have the overall best rates
and rating program for California's small to mid-sized contractors.
But we think we do! And we’d like you to take advantage of it.
Did you know that SCP conducts Annual Account Reviews to see if
our existing Contract Surety Accounts qualify for a lower rate?
Also see License, Permit and Miscellaneous Bonds
Bid Bonds
A Bid Bond is submitted by the contractor along with his bid for a specific project. It is usually in an amount of 5% to 20% of his total bid (with 10% being the most common amount). A Bid Bond provides the owner of the project with some financial assurance that should this contractor be awarded the construction project, he will enter into the contract with the owner and also post a Performance and Payment Bond.
While there is a one-time $100 only charge for the first bid bond, all other bid bonds
are Free.
(There is a rare exception--when you are low bidder and Performance
and/or Payment Bonds are NOT required.)
Performance and/or Payment Bonds
A Performance Bond is submitted by the contractor to the owner of the project once he has been awarded the job. A Performance Bond guarantees contract performance by the contractor, according to the contract specifications, terms and conditions. The surety company's capital and surplus backs this guarantee up to the financial limit of the bond (which is often at 50% or 100% of the full contract amount.)
A Payment Bond is also submitted by the contractor to the owner of the project once he has been awarded the job. A Payment Bond guarantees that this contractor will pay certain bills for labor and materials (including those from subcontractors and suppliers) which are associated with this contract. The surety backs this guarantee up to the financial limit of the bond (which is often at 50% or 100% of the contract amount.)
Rate Range is ½% to 3½%
Premium is calculated on the contract amount, or the bond amount, which ever
is greater.
(For bonds with multiple obligees or extra long terms, there is an
additional charge.)
Bonding Capacity Limits (SCP BondLine)
“Realistically, what size jobs will the surety be willing to consider for my company?” A contractor can apply for an SCP BondLine--at No Charge-- and receive a pre-qualification review which will advise him of what size projects SCP is willing to consider for bonding. The contractor will receive an SCP BondLine Letter indicating both single job and aggregate bonding amounts. (Often the letter will also indicate steps the contractor can take towards increasing his bonding capacity.) SCP can also issue an SCP BondLine Certificate (pocket size) which will summarize the foregoing information.
Maintenance (Warranty) Bonds
A Maintenance (Warranty) Bond, while not normally required, can sometimes be required by the owner of a construction project. It provides coverage for defective workmanship or faulty materials discovered after the project has been completed. The bond typically has a financial limit at around 10% of the final contract amount.
While most Maintenance Bonds are written at No Charge or at $100, typically the rate would not exceed 1% per year. The cost of a Maintenance Bond depends on project circumstances and bond form terms and conditions.
Supply Bonds
A Supply Bond is submitted by a contractor/supplier to another party once he has been awarded a contract to supply a specific product to the other party. A Supply bond guarantees contract performance by the contractor/supplier, according to the contract specifications, terms and conditions. The surety backs this guarantee up to the financial limit of the bond (which is often at 50% or 100% of the contract amount).
Rate Range is ½% to 2%
Premium is calculated on the contract amount, or the bond amount, which ever is greater.
Subdivision Bonds
Subdivision Bonds are submitted by a developer/home builder to the local municipality or county at the time he/she wants to file a lot map or obtain a building permit. Subdivision Bonds guarantee that specified improvements--such as streets, sidewalks, curbs, gutters, sewers, water main--will be installed by the developer/home builder within a certain time period and according to the governing body’s requirements. The surety backs this guarantee up to the financial limit of the bond.
Rate Range is ½% to 4½%
Collateral may be required.
Application Process
- Print the appropriate application listed above
- Complete the application
- Mail or fax the application
If you prefer, have an application package sent to you please Contact Us.
Important
SCP has a general $100 minimum premium charge for bonds.
In certain specific cases this has been waived or may not apply.
Forms
require the use of Adobe Acrobat Reader. It is available free from the Adobe web
site.
| George Alfred Peate License 0D42655 6345 Balboa Blvd #325 Domicile: California |
Phone: (818) 609-9232 |
Mailing Address: PO Box 10289 Van Nuys, CA 91410-0289 |
Street Address 6345 Balboa Blvd #325 Encino, CA 91316 |
Fax: (818) 609-9250 |