A Charlotte performance bond is a type of surety bond that guarantees that you, as a contractor, will complete a project you’ve been hired to do and that it will be completed to the guidelines agreed to in the contract.
What is a Performance Bond?
In Charlotte and all throughout North and South Carolina, performance bonds are often written in conjunction with payment bonds, though they have separate functions. A performance bond means that you’ll do the work you promised in your bid. If you fail to complete the project, the project owner can file a claim against you.
Performance bonds are one of the most common types of bonds in the construction business. They’re required by federal law for any public contract over $100,000, although cities and states have created their own specific criteria over the years. Private companies often require performance bonds as part of their process, too.
How to Apply for a Performance Bond
Typically you’ll apply for a Charlotte performance bond at the same time you apply for a bid and payment bond. You’ll need to supply specific information:
- The amount of your bid
- The bid date
- Whether you’ve been bonded before
- How long your company has been in business
- Your personal credit score
If the bid or job is over $250,000, you’ll need to share more financial information with the surety company. They use this to determine if you’re a good financial risk.
Performance Bond Costs
The cost of a performance bond depends on the total bid. For large contracts, you can expect your performance bond premium to be about one percent of the total. For smaller contracts, the premium will be approximately three percent of the bid total. If you have poor credit or less than stellar financial records, you may still be bonded but your premium will be calculated at a higher percentage.
Performance Bond Claims
If you do not complete the project to the specifications in the contract or if you don’t complete the project at all, the project owner can file a claim. The surety will investigate the claim, and if found to be valid, will pay the compensation owed to the owner. If a performance bond claim is paid, you will be legally responsible for compensating the surety
The next time you bid on a public job or any project requiring a performance bond, contact Charlotte Insurance. We’ll work with you during the bond process and after, if a claim is filed. Let us help you get the projects that will help your business continue to grow.