Guaranteeing Project Completion & Contract Compliance
Generally, large-scale construction project owners want assurances that the contractor they hire will perform as expected and complete the project in accordance with the terms and conditions of their contract. That’s where performance bonds come in! Whether you’re bidding on a public or private project, having a performance bond can demonstrate to project owners your commitment to quality and reliability as a contractor, helping you win big contracts.
Here at King Risk Partners, our surety agents are familiar with the contract bonding process and can help you secure the performance bond you need quickly and at a competitive price. Contact us today to speak with one of our agents and take the first step toward securing your performance surety bond!
What Is A Performance Bond?
A performance bond is a type of surety bond that serves as a financial guarantee, assuring project owners that contractors will successfully complete the job in accordance with the terms of their contract. Often backed by an insurance company or bank, these contract bonds protect the project owner (the obligee) if the contractor (the principal) fails to meet their contractual obligations. These bonds are most commonly required for public construction projects, but many private developers also require them to safeguard their investments. If you’re a contractor, obtaining a performance bond can help you stand out during the bidding process!
How Performance Bonds Work
Secured by a contractor before the start of a project, performance bonds provide a guarantee to project owners that contractors will meet their contractual obligations. However, if they fail to do so — whether due to financial difficulties, delays, negligence, or any other reason — the obligee can file a claim against the bond. If the claim is valid, the surety may either pay for the damages up to the bond amount or hire another contractor to complete the remaining work. Additionally, it’s important to note that the contractor is still responsible for reimbursing the surety for any valid claims. Ultimately, performance bonds protect project owners and encourage contractors to successfully complete the project in accordance with their contractual obligations.
Frequently Asked Questions
Performance bonds are often required for most large-scale public and private construction projects. For example, under the Miller Act, performance bonds are mandatory for any government-funded project exceeding $100,000. Similarly, many states have “Little Miller Acts” that require contractors to secure a performance bond for any projects exceeding a certain dollar amount. Additionally, private project owners may also request a performance bond to protect against financial losses.
The exact cost of a performance bond, also known as the bond premium, varies depending on a number of factors. However, your bond premium will only be a small percentage of the contract value, usually somewhere between 1% and 4% depending on factors such as:
- The contractor’s credit history
- The contractor’s experience
- The value of the contract
The experienced agents with our insurance agency can help you find the most competitive prices for your performance bond!
Yes, you can. While strong credit can help you qualify for a lower premium, contractors with poor credit can still get a performance bond. Whether your credit rating is stellar or less-than-ideal, our surety agents work hard to find you the best prices possible for your contract bonds!
Call the experienced surety agents at King Risk Partners! Our knowledgeable team makes the contract bonding process smooth, simple, and stress-free. Get in touch with us today to take the first step toward securing your performance bond!