Types of Bonds
What is surety bonding?
Surety bonding holds the contractor accountable for all the terms and conditions set forth in the contract. Surety companies pre-qualify contractors to insure the project owner’s assets.
What is a bid bond?
Bid Bonds provide a guarantee to the project owners that the bidder will take the job if selected. This is a type of selection process. It offers financial assurances that a bid has been submitted in good faith.
What is a performance bond?
A Performance Bond is issued to one party of the contract as a guarantee against the contractor’s failure to perform their obligations in accordance with the terms and conditions of the contract. If the owner of the performance bond is a general contractor subcontracting out a portion of the work, the subcontract performance bond would protect the general contractor should the subcontractor fail to perform as outlined in their contract.
What is a payment bond?
A Payment Bond is a guarantee that the contractor will pay subcontractors, laborers, and material suppliers associated with the project.
Why do I have to pre-qualify with a surety?
This gives the owner or contractor peace of mind. Surety underwriters analyze the contractor’s financial capacity to perform what was tasked in the contract. The underwriter then analyzes the work of the contractor, including but not limited to: successful completion of previous bids, their business history, and references.
How are the costs of a contract bond determined?
Surety rates are determined by duration of the contract, financial capability of the contractor, and warranty. Contract bonds range from 1% – 3% of the contract price. The premium’s cost includes performance and payment bonds, one year of maintenance for defective materials and/or workmanship. There is no charge for a bid bond.
How do I file a claim on a surety bond?
Please give us a call to file a claim. We will ask for specific details and documentation. This will help you and our professionals get a claim filed with ease.
What financial information is needed for a new submission?
For new submissions, please provide the last 3 years of year end financial statements for the company. Additionally, include current personal financial statements on all stockholders/owners; and a bank reference letter outlining total line of available credit.