Bid Bond
A bid bond assures that you’ll execute the job at the price you’ve quoted. It offers project owners confidence that you’re committed to your bid and will proceed with the project if selected.
Performance Bond
Once awarded a bid, a performance bond is typically issued to ensure completion of the job as per contract specifications and within the agreed-upon timeline. It provides project owners protection against non-performance or delays.
Payment Bond
Accompanying the performance bond at no additional cost, a payment bond guarantees timely payment to suppliers and subcontractors for their contributions to the project. It assures suppliers and subcontractors of receiving payment for their services.
Notary Bond
Click here to purchase a Notary Bond.
Pricing and Process
Unlike insurance, bonds operate more like banking, with the bonding company expecting not to pay a claim. Bid bonds typically range from $100 to $200.
Performance and payment bonds typically cost around 3% of the contract price, which needs to be factored into your bid. This rate may decrease with a proven track record of successfully completing contracts. Various cities have specific bond forms and liquidated damages policies, which must be followed when submitting bond requests.
For jobs exceeding $250,000, the process becomes more complex, requiring a 6-page application and CPA-reviewed or compiled financial statements. Bonding companies primarily evaluate Character, Capacity, and Capital. Building a bonding line of credit involves gradual steps, including maintaining records of completed jobs and securing a construction accountant.
Partner with Us
Rely on Contractors Insurance Agency to navigate the bonding process and ensure compliance with all project requirements. Our expertise and tailored guidance will assist in securing the necessary bonds and laying a solid foundation for your contracting business.
