J.M. Wilson, an Excess and Surplus Lines Broker, recently wrote an article on when a Performance Bond is needed and what it covers along with what is needed to obtain a performance bond.

If you are a Contractor or Subcontractor, you need to read this article!

Who Requires a Performance Bond? 

Mostly for contractors working on a public project over $100,000 need performance bonds but they can also be required for private job owners and smaller contract amounts. Subcontractors and suppliers may also be required to have a performance bond.

What it Covers:

• Bid Bonds guarantee the contractor will accept the contract if awarded as low bidder
• Bid Bonds are typically for 5-10% of the bid
• Payment and Performance Bonds guarantee that the contractor will perform the contract and pay for labor and materials
• Payment Bonds are typically 100% of the contract amount

Learn what is needed when obtaining a performance bond:

Who Requires a Performance Bond? Why?
– Mostly for contractors working on a public project over $100,000 but can also be required for private job owners and smaller contract amounts
– May be required of subcontractors & suppliers
– Ensures the Contractor’s character, capacity, and capitol to perform the contract
What it Covers
– Bid Bonds guarantee the contractor will accept the contract if awarded as low bidder.
– Bid Bonds are typically for 5-10% of the bid
– Payment and Performance Bonds guarantee that the contractor will perform the contract and pay for labor and materials.
– Payment Bonds are typicallly 100% of the contract amount
Example of Companies Required to Obtain a Bond:
– General Contractor
– Excavator
– Painter
– Cement Paver
– Roofer
– HVAC
– Asbestos Abatement
– Security Alarm Installer
– Electrician
– And Many More!

Items Needed for Consideration of Any Bid &/or Performance/ Payment Bonding Account

1. Last 2 or 3 Fiscal year-end financial statements for the business
2. Current personal Financial statements for all the owners
3. Contractor’s Surety Questionnaire
4. Current Schedule of Work on Hand
5. Current Bank reference letter, indicating bank line established
6. Resume of Owner(s)
7. Job reference letters
8. Current Certificate of Insurance

If you have questions on obtaining a Performance Bond for your business, call your Commercial Lines Account Executives at Barr’s Insurance.

~Cheryl Pastor, Social Media Specialist