Site Improvement Bond Requirements
When a contractor is hired to perform improvements to an already existing structure, they will frequently be required to obtain a site improvement bond.
This bond is a type of construction bond. It is typically obtained by contractors, developers, or builders.
Improvements covered by this type of bond may include upgrades or repairs to:
- Sidewalks, pavements, and curbs
- Roads and streets
- Sewer, storm drains, and drainage facilities
- Lighting, and more
Site improvement bonds are similar to subdivision bonds. The main difference between them is that site improvement bonds are required for work on already existing structures, whereas subdivision bonds are necessary for new construction.
Why Is This Bond Required?
This bond serves as a guarantee that you will complete improvements to a site in accordance with the terms of the construction contract as well as building regulations. It protects the project owner and their investment in the project.
If a contractor defaults on their contractual obligations, this may lead to a claim being filed against their bond. A violation of the project terms may include non-completion of the required improvements, low-quality improvements that do not comply with building codes, or other legal breaches and violations.
When a contractor is found to be in violation of their contract and to have caused losses to the project owner, a claim can be filed against their site improvement bond. The purpose of the bond claim is to secure compensation for the owner and to guarantee the completion of the improvement project.
In the case of a claim, the surety that has issued the bond must conduct a check to determine whether a violation of the bond’s terms has occurred. If it has, the surety must take action to either compensate the claimant or complete the project.
Any compensation extended by the surety can be in an amount of as much as the full penal sum of the surety bond.
Want to know more about how surety bonds work? See our detailed ‘What is a surety bond’ guide for a full overview!
Do you have any questions about getting a site improvement bond? Call us at 866.450.3412 anytime!
How Much Does a Site Improvement Bond Cost?
The cost of your bond will depend on a variety of factors. Typically, the cost of a bond is equal to a percentage of the total bond amount. For contract bonds, such as the site improvement bond, that percentage is highly dependent on a number of factors.
Factors That Determine Your Bond Cost
When applying for a contract bond, the surety will take the following factors into consideration in order to determine the premium that you need to pay to get bonded.
- The contract amount
- The amount of bonding coverage required by the contract
- Your personal credit score
- Detailed financial statements and other financial information related to the project and your operations (this is typically required for projects with a high amount)
- Your work record, such as previously completed projects
- Your current bonding status on other construction projects
All of these factors will determine the exact rate at which you will be able to get bonded. Bond rates on construction projects are determined on a case-by-case basis.
Note that getting a contract bond with bad credit is typically not possible. Having slight credit issues may still qualify you for a site improvement bond but this will depend on your specific case.
How Can I Get a Site Improvement Bond?
To get a site improvement bond, see our site improvement bond application page. Download all relevant forms, and follow the instructions.
Once we receive and process your documents, we will get in touch with you to provide you with a free quote on your bond or to request further information.
If you have any questions about getting a site improvement bond, get in touch with our bond experts at 866.450.3412!
