S Philips Surety & Insurance Services is a Nationwide Supplier of Surety Bonds

A Performance Bond is issued to one party of a contract as a guarantee against the failure of the other party to meet obligations specified in the contract. It is also referred to as a contract bond. A performance bond is usually provided by a bank or an insurance company to make sure a contractor completes designated projects. The Miller Act instituted the requirement of placing performance bonds.

The Act covers all public work contracts $100,000 and above. These bonds are also required for private sector that necessitate the use of general contractors for their company’s operations. Jobs that require payment and performance bonds go through job or project bidding first. As soon as the job or project is awarded to the winning bidder, payment and performance bonds are provided as a guarantee for the completion of the project.


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Guarantee of funds, this new bond covers the money that a homeowner advances to the contractor in accordance with their written agreement and helps contractors make homeowners feel more secure when advancing monies.

Performance Bonds FAQs

We answer some of your most frequently asked questions about this service, such as, “What are performance bonds?” and more in the section below.

What is a performance bond?

A performance bond is a kind of surety bond that guarantees the proper execution of a project or contract in accordance with its terms and conditions. Although it can be utilized in various fields, the building industry is the most frequent user of such bonds.

It is possible for a contractor or business to be asked to submit a performance bond as security when signing a contract with a customer or construction project owner. The bond, which often ensures that the contractor will carry out their obligations as stipulated in the contract, is issued on behalf of the contractor by a bank or an insurance firm.

How do performance bonds work?

It’s important to understand what to expect from a construction performance bond. Work arrangements can get ugly pretty quickly when one party doesn’t perform as promised.

This type of bond ensures that the company or person that issued the performance bond (often referred to as the surety) will reimburse the client for any monetary losses or damages that result if the project isn’t completed as specified in the contract.

In the event that the contractor fails to perform or comply with the terms of the agreement, the performance bond gives the customer financial relief, consequently protecting them from monetary losses.

The bond amount typically differs based on the specific project at hand and industry guidelines, and it is typically expressed as a percentage of the agreement’s value. In most cases, the builder is responsible for paying the performance bond’s cost, which is then added to the project’s final cost.

What will a performance bond cost?

A performance bond often costs a portion of the contract’s value. The scope and complexity of the job, the skills and financial health of the contractor, as well as any particular conditions established by the project owner or customer, can all affect the performance bond cost.

The premiums for such contract bonds typically vary from one to three percent of the total contract value. However, based on the risk assessment made by the surety company, the premium could be higher or lower.

It’s vital to understand that the premium they surety will pay is a recurring cost, a yearly fee that is paid over the course of the undertaking or agreement. The size of the project and how long the performance bond must be enforced will determine its overall cost.

Furthermore, the builder’s creditworthiness, reputation, and prior experience on comparable jobs may have an impact on the cost of obtaining a performance bond. In comparison to those with poor financial health, contractors with an excellent financial background and a history of successfully completing projects may be able to acquire reduced premium rates.

Is a payment bond and a performance bond the same thing?

No. Although they might be similar, payment bonds and performance bonds have their differences. Both types of contracts are designed to protect different people.

Performance bonds ensure that construction projects or contracts will be completed in accordance with the specified terms and conditions.

They guarantee that the construction company involved will fulfill their responsibilities, such as adhering to the necessary quality standards, completing the project according to the agreed specifications, and completing the work on schedule.

The project owner will receive cash compensation from the performance bond if the contractor doesn’t carry out their responsibilities.

A payment bond is made expressly to safeguard the subcontractors, construction material suppliers, and workers who are employed on the building project. It provides the assurance that they will receive payment for the labor or supplies they contribute to the project.

On the other hand, a bid bond guarantees a contractor’s dedication to signing an agreement if their bid for a particular project is accepted. In the event that the builder breaches the agreement after receiving the project or refuses to abide by its conditions, it offers financial compensation to the project owner.

Can a contractor with poor financial health get a performance bond from a surety company?

While having a poor credit score may make getting a performance bond more difficult, it certainly isn’t impossible. You will need to talk to us to determine whether you qualify. Keep in mind that in such circumstances, the premium can be higher.

Why should I choose S Philips Surety & Insurance Services as my surety bond company?

Unlike other surety bond companies, S Philips Surety & Insurance Services is no newcomer to surety bonds. We have nearly four decades of experience and conduct our dealings with excellence and attention to detail. Moreover, you can expect a great experience from start to finish, with expert advice and guidance.

How do I make a performance bond claim?

To initiate a claim, please get in touch with us, and we will guide you through the process.

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