What is a Performance Bond in Pennsylvania?
How much does a Performance Bond Cost in Pennsylvania?
The cost of a performance bond can vary widely depending on the amount of coverage that is required. It is based on the total amount of the contract. Things that can affect this pricing are the perceived risk of the job, the financial position of the entity being bonded, plus other factors.
How much do bonds cost in PA?
Bond prices fluctuate based on the job size. The cost of a bond is estimated through a couple of back-of-the-envelope calculations. In general, the cost is approximately three percent (3%) for jobs under $800,000 and then the percentage is lower as the contract amount increases. We work diligently to find the lowest premiums possible in the state of Pennsylvania. Please call us today at (913) 225-8501. We'll find you the very best rate possible for your maintenance bond or completion bond.
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These rates are for Merit clients, Standard rates are higher
How do I get a Performance and Payment Bond in Pennsylvania?
We make it easy to get a contract performance bond. Just click here to get our Pennsylvania Performance Application. Fill it out and then email it and the Pennsylvania contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We thoroughly review each and every application for commercial bonds and then submit it to the surety that we believe will provide the best p & p bond for your matter. The surety broker will perform a credit check. We have a high success rate in getting our clients performance and payment bonds at the best rates possible.
Find a Performance Bond near Me
What is a Payment Bond? Is it included with the Performance Bond? A payment bond is a bond that assures that the subcontractors and material vendors are paid. The payment provides that if the subcontractors are not paid timely and they make a valid claim, then the surety will pay them (and then collect and try from the general contractor).
What is a payment and performance bond? What is a contract bond?
Typically, a payment and performance bond are done together in the same contract by the surety. This way, the owner of the project is assured that the project can be completed pursuant to the terms of the contract and that it will not be liened by any contractor. The bond is performance security for the benefit of the owner.
Who Gets the Bond?
The general contractor is the entity that gets the bond. It is for the benefit of the owner (or in the case of government contract work, the governmental entity). It's the general contractor that has to apply for the bond and be underwritten before the performance and payment bond is written by the surety. This is also known as bonding a business.
How to Get a Performance Bond in PA
Just call us. We’ll work with you to get the best Pennsylvania bond possible.
We provide performance and payment bonds in each of the following counties:
Clear-Cut Suggestions When Thinking Of Performance / Payment Contract Bonds Defined
It is not incorrect to say that Performance / Payment Contract Bonds are quite complex, specially if you do not have any idea how this works. Most individuals consider this as insurance, but it is actually a type of guarantee that the principal will do their work effectively for the obliged. Insurance companies can offer a Performance / Payment Contract Bond, but this is not insurance because its function is quite different. Most folks would expect you to get a Performance / Payment Contract Bond before they consider your services because it is a form of guarantee to them.
If you wish to get a license bond, permit bond, commercial bond and more, you have to know how they work. We are going to offer you some good info about the significance of Performance / Payment Contract Bonds and how they work.
A Simple Explanation On A Performance / Payment Contract Bond
Performance / Payment Contract Bonds will always be required by the public because it will protect them and it'll guarantee that the principal will fulfill their responsibilities. As the principal, you need to obtain a license Performance / Payment Contract Bond to guarantee that your company will adhere to the laws and you need a contract bond to make certain that a public construction project will be accomplished. These are some examples that would offer you an idea about a Performance / Payment Contract Bond.
This is actually made for the customers as they are protected by the bond, but it will benefit you as well since they will trust you if you have a Performance / Payment Contract Bond.
How Does This Type of Bond Work?
Performance / Payment Contract Bonds are actually regarded as a three-party agreement among a surety company, the principal and the obliged. The principal is the employer, individual or company that would perform the work while the obliged is the project owner.
Construction companies would be asked for by the law to have their Performance / Payment Contract Bonds when they are chosen for a public project. As soon as the government demands a construction company to do something, the winning contractor should secure several bonds.
The bond will ensure that the sub-contractors and the other employees will be paid even if the contractor defaults. The contractor would be accountable in covering the losses, but as soon as they reached the limit, the duty will fall to the surety company.The contractor will handle the losses, but once they actually reached the limit, the duty will truly fall to the surety company.
The Application For A Performance / Payment Contract Bond
Performance / Payment Contract Bonds are actually provided by insurance organizations, but you could always look for standalone surety businesses that would concentrate on these products. It will not be easy to apply for a bond because the applicant will have to experience a rigid procedure that is very comparable to applying for a loan. The bond underwriters will evaluate the financial history of the applicant, their credit profile and other key factors to make sure that they deserve to be approved. It signifies that there is a chance that you will probably be denied for a Performance / Payment Contract Bond, specially when the underwriters found something bad on the credit history.
How Much Do You Have To Spend?
You can't really put an exact cost for a Performance / Payment Contract Bond because the cost might be affected by numerous factors like the bond type, bond amount, where it will likely be issued, contractual risk, credit rating of the applicant and more. There are undoubtedly thousands of different bonds available today and the cost will depend upon the bond that you want to acquire. The amount of bond that you are going to avail can also be an issue since you could pick a $10,000 bond or a $25,000 bond or higher.
If you already have a credit history of 700 and above or very near this number, you could qualify for the standard bonding market and you just need to pay 1 to 4 percent of the Performance / Payment Contract Bond amount. It means that if you may actually get a $10,000 bond, you only need to pay about $100 to $400.
Is There A Chance To Be Declined?
There is a chance that your license and permit bond request will actually be declined by the insurance providers and it will invariably depend upon their background check. As soon as they think that giving you a bond is a big risk, they won't release a Performance / Payment Contract Bond for you.
Credit score is also a factor because in case you have a bad credit rating, it will be very hard for you to get a Performance / Payment Contract Bond as the businesses consider you as a risk. In case you have a bad credit history and you were approved for the bond, you usually need to pay an interest rate of 10 to 20 percent.
There is a possibility that your application will likely be refused so check all the requirements before you apply.
You must know that a Performance / Payment Contract Bond is very important for companies, especially once they are considering a government project. Performance / Payment Contract Bonds will really be used for lots of things, but they have one thing in common - they always protect the obliged.
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