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Lake Havasu City, AZ

An Arizona Resource for License & Permit Bonds

What makes contract surety bonds necessary? These bonds protect public owners, private owners, lenders and prime contractors from the potentially devastating expense of either contractor and subcontractor failure. Given these protections, contract surety bonds are definitely a wise investment.  

Types of Contract Surety Bonds

There are three basic types of contract surety bonds:

  • The bid bond offers assurance that the bid has been submitted in good faith and that the contractor will enter into the contract at the price bid and provide the required performance and payment bonds.

  • The performance bond protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.

  • The payment bond offers assurance that the contractor will pay the specified subcontractors, laborers and material suppliers on the project.

Pre-Qualification Process

Because sureties must pay in the case of contractor failure, surety bond companies go through a rigorous and in-depth process in order to prequalify a contractor. This includes a thorough examination of the contractor's business operations. Before issuing a bond, the surety company must be fully satisfied that the contractor has:

  • Good references and an excellent reputation, plus the ability to meet current and future obligations.
  • Experience that matches the contract requirements
  • The equipment to do the work, or the ability to obtain such equipment.
  • The financial strength to support the desired work program.
  • An excellent credit history, an established bank relationship and a line of credit.

If you feel you meet the above criteria and would like to have our company issue a contract surety bond for you, please fill out this form.  

About Issuing Bonds

 When bonds are specified in any contract documents, it is the contractor's responsibility to obtain them. The contractor will include the bond premium amount in the bid (the premium is usually payable upon execution of the bond). If the contract amount changes, the premium may be adjusted to reflect this change.

Surety bond premiums vary depending on the size, type and duration of the project, as well as on the contractor. In general, premiums can range from 1% to 3% of the contract amount. Typically, there is no direct charge for a bid bond. In many cases, a performance bond incorporates the payment bond and a maintenance period.  

Surety Bond Application

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