Bond TypeContractor Payment Bonds
What is a payment bond?
Payment bonds ensure that all project workers, subcontractors, and material suppliers receive payment in accordance with the terms of their contracts.
If contributors of the project are not paid, they have the right to sue the contractor. In this instance, when a valid claim is brought against a payment bond, the surety must pay the money owed up to the bond’s full amount.
How much do payment bonds cost?
Payment bonds are typically issued at a rate of about 3% of the total bond amount. However, the exact price you will pay for your bond will vary based of a review of your personal and business financial history. Determine your payment bond premium today by submitting a free, no-obligation quote online today!
How to get a payment bond
The first thing to do when you are ready to obtain a payment bond is make sure you have all the pertinent information. This includes:
Size of the job at hand and its contractual terms
Amount of bonding coverage required
Updated work record
Financial documentation like a recent profit and loss statement and corresponding balance sheet
Once all pertinent documents and information are gathered, applicants can then submit a contractor bond application completely online to receive a free, no-obligation quote. ContractorBonds.com experts will connect with multiple surety companies to find the best price possible for your bond.
The difference between bid, payment, and performance bonds
Bid bonds are required of a contractor when submitting a bid on a project to ensure the contractor’s financial backing and capabilities as a worker.
A performance bond is required to ensure that every project is completed according to the terms outlined in the agreed upon contract.
A payment bond is required of a contractor to protect all suppliers and subcontractors working under them to ensure proper payment.
Payment bonds are often required at the same time as performance bonds and could even be on the same form.