Reno Insurance Carries Contract Bonds to Get the Work Done!

Bid bonds and performance bonds are both types of construction surety bonds that can be required on larger jobs or city and government projects. These contract bonds are underwritten similar to other commercial surety bonds. They use a variety of underwriting measures, including both claims on the contractor’s license and personal or business credit history. Performance Bonds are written to protect the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions. 

Bid Bonds

Bid bonds are the first thing you need in order to bid on public jobs. They are a guarantee that the bid you submit for a project (usually public construction jobs) is accurate. If your bid is inaccurate, you win the project but back out of the job or cannot post a performance bond, a claim can be made against your bid bond which you’re responsible to pay. This often happens when a contractor underestimates the costs by missing a major expense for the job, and as a result is unable to get approved for the performance bond required to perform the work.

Performance Bonds

If you are awarded a job, you’ll need to get a performance bond. Performance bonds are guarantees by a bonding company that jobs will be completed per the specifications of the contract. A bond is different than insurance, as the bonding company will not simply write a check if you default on the job. If you’re unable to complete the job, the bonding company may put the job out to bid with select contractors or even complete the work themselves. Performance bond requirements are set in place by the Miller Act for all public work contracts $100,000 and above. Bonds may also be required for private work or by a general contractor requiring it of their sub-contractors. If claims are filed on your performance surety bond, you are responsible to pay back the bonding company.

Types of Bid and Performance Contract Bonds:

Bid Bond - Guarantees that if the principal is a successful bidder, the principal will enter into a contract with the obligee and provide security in the form of performance and payment bonds. 

Performance Bonds - Guarantees by a bonding company that jobs will be completed per the specifications of the contract.

Payment Bonds - Assure that the contractor will pay subcontractors, laborers, and material suppliers on the project. Normally included as part of the performance bond.

Maintenance Bond - Guarantees the contractor will correct faulty work and replace defective materials.

Completion Bond - Guarantees completion of a contract regardless of the owner's obligations or risks.

Cost of Bid & Performance Bonds

Bid & performance contract bonds are priced according to the overall cost of the project and the scope of the work. Please contact our office and we can work up a quote for a bid and/or performance bond that will allow you to factor the cost of the bond into your bid before you submit it. Your performance and payment bond cost should be included in your bid, making it so you do not pay for your bond, the owner does. This will allow you to have an accurate cost of what your insurance pricing will be for the upcoming project you are bidding. 

Maximize the growth of your construction company with bonds. We are here to help!