- Contractors License Bonds
- Contract Bonds
- Bond FAQ
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Contract bonds such as bid bonds, performance bonds and/or payment bonds, are often required by entities that hire contractors. Unlike license bonds, contract bonds cover a contractor for a particular project and are sold on that basis.
Premium and Applications
For bonds that are required for commercial jobs that are less than $250,000, getting a contract bond is a relatively easy process. All CSIA requires is the following three-page contract bond application to be faxed or mailed to us:
Qualified applicants will be contacted within 24 hours after we receive a properly completed application. The premium for these contract bonds is 3% of the contract price, with a minimum premium of $100.
Contract bonds for commercial jobs larger than $250,000 or residential work require quite a bit more paperwork and time. The application package below has the details on what will be required to obtain contract bonds of this size:
>>> Large Contract Bond Package <<<
The price on these contract bonds varies according to the size of the job and the experience of the contractor. Prices on contract bonds start at 3% on jobs just over $250,000 and can be as low as 0.5% on very large jobs.
A Bid Bond is submitted by the contractor along with his or her bid for a specific project. It is usually in an amount of 5% to 20% of their total bid (with 10% being the most common amount). A Bid Bond provides the owner of the project with some financial assurance that should this contractor be awarded the construction project he or she will enter into the contract with the owner and also post Performance and Payment contract bonds.
A Performance Bond is submitted by the contractor to the owner of the project once he has been awarded the job. Performance Bonds guarantee contract performance by the contractor according to the contract specifications, terms, and conditions. The surety company’s capital and surplus backs this guarantee up to the financial limit of the bond (which is often at 50% or 100% of the full contract amount).
A Payment Bond is also submitted by the contractor to the owner of the project once he has been awarded the job. Payment Bonds guarantee that this contractor will pay certain bills for labor and materials (including those from subcontractors and suppliers) which are associated with this contract. The surety backs this guarantee up to the financial limit of the bond (which is often at 50% or 100% of the contract amount).