It’s crucial for contractors to budget effectively during large projects, but unfortunately, estimating some expenses can be difficult. The price of a surety bond in NJ is one of these expenses. Although the most accurate price quotes will come directly from a surety, contractors can benefit from understanding the factors that affect surety bond cost.
Type of Bond
Different bonds carry different levels of financial risk. For example, a notary bond carries much less risk than a contract bond ensuring the completion of a high-value deal. Principals are charged set percentage fees that vary by bond type, based on the inherent level of risk.
A surety also considers the personal and business credit history of the contractor when determining surety bond cost. Bond applicants with credit problems are viewed as risks for future losses, and they are charged accordingly. Applicants with a higher credit rating can expect to pay premiums that represent a lower percentage of the bond.
Often, contractors are required to purchase surety bonds for projects with government agencies. Different agencies may require different minimum bond amounts for any project they commission, and the total value of the bond will affect what the principal pays.
Evaluating Cost Accurately
Since the factors that affect the cost of a surety bond in NJ can be complex, it is best for contractors to seek quotes for any upcoming projects early. By completing the bond application sooner than later, contractors can gain more time to compare their options and budget for the eventual expense.