What is a performance bond?
Performance Bonds guarantee that the principal will perform all work for the obligee as stated in the contract. This type of bond must be submitted to an obligee by the principal with the winning bid once they have been awarded the contract. More often than not, performance bonds are issued to an obligee along with a “Payment Bond” (labor and materials), which is where the term “Performance and Payment Bond” comes from.
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Current Market for Performance Bonds: Liberal underwriting practices at the beginning of the 21st century led many bonding companies to write contractors bonds in excess of what they actually qualified for. Unfortunately, this aggressiveness led to record losses by many companies in the industry and even forced some sureties out of business. Over the past decade, however, bonding companies have gotten back to more conservative, traditional underwriting practices, which have helped the industry stabilize in regards to contract bonding. Today, bonding companies across the country apply more scrutiny when underwriting contract bonds, and understandably will only write principals bonds that their financial and credit history will allow them to qualify for.
About Our Programs: Our agency offers programs for all different bond sizes, and many different levels of risk. For performance bonds less than $250,000, we offer a quicker application and approval process. An offering that helps us further differentiate from competing agencies is our specialty bond programs. For instance, we can help principals obtain non-construction performance bonds, such as Department of Defense performance bonds (DoD performance bonds).
Many sureties are currently uncomfortable writing contract bonds for customers with bad credit that are considered “high risk”. Unfortunately, this is the case throughout the much of the surety bond industry. However, our agency currently has connections with bonding companies that at times can offer higher approval ratings for customers with slight credit issues than many of our competitors are able to offer.