CostHow Much do Contractor Bonds Cost?
How much do contractor bonds cost?
Contractor Bond Cost in Construction
Performance bonds, bid bonds, payment bonds, and right of way bonds are all common contractor bonds required during construction, maintenance, or installation projects.
Performance bond cost
Performance bonds are subject to underwriting consideration based on the project’s bid amount and the applicant’s financial credentials and past work history. ContractorBonds.com can typically issue these bonds at a rate of 2.5% to 3% of the bond amount for qualified applicants. For example, if your project is contracted for $100,000, you could pay between $2,500 and $3,000 for your bond.
Bid bond cost
All bid bonds are issued at a flat rate of $100 per contract.
Payment bond cost
Payment bonds are subject to underwriting and can typically be issued at a rate of 3% of the bond amount for qualified applicants. This means that $100,000 of bond coverage could cost as little as $3,000.
Note: All project-based bonds, including contract bonds and license and permit bonds, are subject to underwriting consideration.
When a bond requires underwriting consideration, this means that a surety underwriting expert must review a bond applicant’s personal history, financial history, and credit history, along with the bond required, to determine whether and at what price the bond can be issued. A bond will often require underwriting if it is considered risky, meaning that surety companies are less likely to freely issue these bonds. The only way to determine exactly what price you will pay for an underwritten contractor bond is to submit a bond application, along with any required information, to have a bond quote issued.
Interested in what makes a bond riskier or how the underwriting process occurs? Visit our definitive guide about uncovering the surety underwriting process.
Contractor bonds that are deemed less risky than others will often be instantly issued online to every applicant for the same premium. These bonds require no underwriting consideration, meaning you will receive your quote faster and could even obtain your bond the same day!
For example, the city of Overland Park, Kansas, requires a $2,000 Performance & Maintenance Right of Way Bond that can be purchased instantly online for a $103 premium. Likewise, the city of Mesquite, Texas requires a $5,000 General Contractor Bond that can be obtained through ContractorBonds.com for $100.
What is a contractor bond?
Contractor bonds are often referred to as contractor license bonds and are specific to the construction industry. Federal, state, and local municipalities and licensing authorities require contractors to purchase a surety bond before they can obtain a license and begin work. Learn more about the ins and outs of contractor bonds in our Contractor Bond Definition Page.
How do I know whether a bond is required for me?
When determining whether you require a contractor bond, you must first determine whether you are applying for a license or permit. The next step is to reach out to the obligee — the government entity or licensing authority that requires the bond — or visit its website to find details on the various licensing requirements.