Surety bonds are a vital part of the construction industry in Illinois, protecting project owners, general contractors, subcontractors, and suppliers. Surety bonds ensure that contractors will fulfill their obligations and complete their work according to the terms of their contracts.
In this article, you will learn:
- The 3 types of construction surety bonds in Illinois
- How to get a construction surety bond in Illinois
- The costs associated with surety bonding in Illinois
Types of surety bonds in Illinois
There are 3 significant types of surety bonds used in the construction industry in Illinois:
- Bid Bonds: A bid bond is part of the bidding process for some construction projects. It is required to guarantee the project owner that, if the bidder agrees, they will enter into a formal contract and provide the necessary performance and payment bonds.
- Performance Bonds: A performance bond guarantees the project owner that the contractor will complete the project by the terms and conditions of the contract. Suppose the contractor fails to complete the project as required. In that case, the project owner can claim the performance bond to recover any damages or losses resulting from the contractor’s failure.
- Payment Bonds: A payment bond guarantees subcontractors and suppliers will be compensated for their work or materials they provide under the contract. Suppose the general contractor fails to pay them as required. In that case, the subcontractors and suppliers can claim the payment bond to recover the unpaid amounts.
Where to get a surety bond in Illinois?
If you need a surety bond in Illinois, here’s what you need to know:
- Determine the type of surety bond you need from your contract. Illinois requires different types of surety bonds for various industries and purposes.
- Contractors can obtain surety bonds from Billy Insurance in Illinois. Contractors can get surety bonds from Billy Insurance in Illinois.
- Pay the premium and obtain the bond. Once the bond application is approved, you’ll need to pay the premium and receive the bond. Keeping the bond safe is essential, as you may need to present it to authorities or customers.
Same-day surety bonds in Illinois?
You can obtain same-day surety bonds from Billy Insurance Services and your certificate of insurance. Billy provides a variety of surety bonds, including contractor license bonds, bid bonds, and performance and payment bonds. It’s important to note that the availability of Same-Day surety bonds depends on the type of bond you need and your circumstances.
How much does it cost to get a surety bond in Illinois?
The cost of a contractor surety bond in Illinois will depend on the specific type of bond you need and the amount of coverage required. Contractor surety bonds are typically required in a particular project, and the bond amount is often based on the project’s total value. In general, the premium for a contractor surety bond ranges from 1-15% of the total bond amount.
For example, if you are bidding on a construction project valued at $500,000 and need a bid bond, the bond amount may be set at 10% or $50,000. If the premium for the bond is 5%, the cost of the bond would be $2,500, and if the premium is 10%, the cost would be $5,000.
Can I get a surety bond with bad credit in Illinois?
It’s important to note that the premium for a contractor surety bond may be affected by your personal credit history. If you have a strong credit score, you may be able to secure a lower premium. On the other hand, if you have a poor credit history, you may have to pay a higher premium to obtain a bond.
How long does it take to get a surety bond in Illinois?
The amount of time it takes to get a surety bond in Illinois will depend on various factors, such as:
- The type of bond you need,
- The amount of coverage required,
- Personal credit history.
Suppose you need a surety bond on short notice. In that case, it may be possible to get a bond the same day by working with Billy Insurance Services. This company specializes in providing same-day bonds.If you have time to plan, starting the bonding process as early as possible is a good idea. This will allow you to shop around and compare quotes from different surety bond companies. Overall, the time it takes to get a surety bond in Illinois depends on your circumstances and specific bond requirements. Billy Insurance Services can help with the bonding process and schedule a time to speak to a licensed insurance agent.