Performance Bond

A performance bond is a financial guarantee issued by a surety company on behalf of a contractor, ensuring that the contractor will complete the construction project in accordance with the contract terms and conditions. The bond provides protection to the property owner against losses or damages resulting from the contractor’s failure to perform or fulfill their contractual obligations. In the event of a default or non-performance by the contractor, the surety company will step in to either complete the project or compensate the owner for the losses incurred, up to the amount of the bond. Performance bonds are typically required for public construction projects and may also be requested by private owners for added security and assurance. The bond premium is usually paid by the contractor as a percentage of the contract value, and the bond remains in effect until the project is completed and accepted by the owner.