The typical cost for such can be as low as .5% of the contract amount to as high as 4% of the contract value. This is due to several factors, such as the credit worthiness of the construction firm and the amount of bonds they purchase per year.
Understanding The Claims Process
If a contractor is found to be in default of the contract, a claim can be filed against them. Often times the surety will speak with the contractor. Hopefully, they can come to an agreement about getting things back on track. If this is not possible, then the surety may take over the project by funding the completion of the work and hiring a replacement contractor.
If a subcontractor or supplier fulfills their contractual obligation and the contractor does not pay them, they may file a claim. This requires a simple letter to the surety company. In the letter, the subcontractor or supplier explains their justification for filing the claim. The more paperwork the subcontractor or supplier provides the surety bond producer, the better a surety bond producer can make a decision.