Charlotte Contractor Bonds – Cost and Coverage
Contractor payment bonds protect subcontractors. If you have to pay for a project you don’t complete, consider a surety bond to protect your subcontractors. Surety bonds cover violations of local and state ordinances and even cross state lines. You can find out more about this type of bond by reading our article. This article focuses on two major issues when choosing a surety bond for your Charlotte construction business: cost and coverage.
Contractor payment bonds protect subcontractors
Payment bonds are contracts that guarantee that a contractor will pay his or her subcontractors and other workers on a project. If the contractor fails to pay them, the surety will pay the damages up to the amount of the bond. These bonds are a three-way contract that benefits the general contractor, subcontractors, and the project owner. Payment bonds are useful for a variety of reasons, including protecting the subcontractors.
Payment bonds are a legal requirement for contractors, but the benefits are far greater. They cover subcontractors who have no other way to get paid. For instance, if the project owner’s subcontractor or supplier goes bankrupt, they may not be able to finish it, and they may have ceased operations or opened a new business under another name. However, a payment bond ensures that a contractor will pay their downstream costs, including the subcontractors, laborers, and suppliers.
Coverage for violations of local ordinances
A Charlotte contractor bond ensures that your company complies with state and local rules. This type of insurance is not the same as a bid bond or performance bond, which only protects you against financial loss in case of claims filed against you by customers. It is necessary to advertise that you are bonded and licensed to avoid potential claims from project owners. Having a bond tells potential clients that you have a track record of following the rules. It is also possible for project owners to file claims against you if they discover that your work does not meet the rules and regulations.
When performing construction work, the County of Mecklenburg Land Use and Environmental Services Agency requires contractors to carry surety bonds. These bonds ensure that all necessary permits and fees are paid in full. The Land Use and Construction Bond has a minimum dollar value of $2,000 if the work is within the City of Charlotte. If the project includes the County and City, it must be at least $2,000. The bond value is based on the total estimated permit fees.
Cost of surety bond
As a contractor, you may be wondering how much surety bonds cost for the City of Charlotte. These bonds are required by the County of Mecklenburg Land Use and Environmental Services Agency for construction work. This bond ensures that you will pay all required fees and permits on time. The bond amount varies, depending on the location of your work, but the minimum amount is $2,000 for City and County work or $25,000 for both. The amount of the bond is calculated by estimating the total amount of fees and permits you are expected to pay.
A surety bond protects the business and the customer from losses when a contractor does not live up to his contractual obligations. This bond is like an insurance policy, protecting both parties if something goes wrong on a project. As such, the bond costs as little as $7 per month. While these bonds are a requirement of many businesses, it is a smart idea for any business to get one in order to protect themselves.
Coverage for violations across state lines
A Charlotte contractor bond guarantees that a Charlotte-based contractor will abide by state and local rules. This bond is different from a performance or bid bond, which are used on separate projects. Contractors must advertise that they are bonded and licensed to do business in Charlotte. If the contractor breaches state and local rules during the course of a project, the project owner can make a claim against the contractor.