Almost every construction project will require the general construction company to purchase a bid bond, performance bond, and payment bond.
It is not uncommon for a subcontractor to be required by the general contractor to purchase a performance bond for their segment of the project.
A performance bond is a guarantee that you will complete your project duties according to the contract you signed with the general contractor.
Essentially, this bond protects the general contractor from the catastrophic circumstance of the subcontractor being unable to complete their work due to:
If a subcontractor is unable to complete their part of the project, the performance bond will pay out to the general contractor.
Along with the surety company that underwrote the bond, the general contractor can find a new subcontractor to complete the work or extend funds to the original contractor so they can complete the project.
A subcontractor performance bond is usually only required when the subcontractor has a large and/or critical job for the project. Sometimes a general contractor will require a performance bond when working with a subcontractor they've never used before.
These same rules can apply to a payment bond as well for the subcontractor.
As an industry standard, the price to purchase a performance surety bond is 3% of the project total.
However as you gain more experience and provide a list of successfully completed projects, you can often obtain a lower rate ranging from 1% on the very low end to 2.5%.
If you need a subcontractor performance bond, call us today and tell us about your project at 1-800-608-9950.
You can also submit a quote request and we will contact you within the hour, typically much sooner!
We will help you get pricing and get your bond issued within one to two business days at most.
Make sure you have the project details available. If the amount of substantially larger than other projects you've completed, we may need your business financials, but that is rare in this case.
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