A performance bond is a guarantee of completion of a large project that is issued by an insurance company. Performance bonds are required by law for major public construction projects, but may also be required for private construction projects as well. Despite the size of your project, you should always look into performance bonds in order to protect the contractual agreement between you and your contractor.
How Does a Performance Bond Work?
Three party agreement:
The Principal: the person or business who will be performing a contractual service
The Obligee: the recipient of the contractual service
The Surety: the financial institution that guarantees the completion of principal’s service
When a performance bond is issued, clients are protected against a contractor failing to deliver their agreed upon services. Performance bonds will even protect clients from situations where their contractor may declare bankruptcy or other financial issues. In the event the contractor fails to complete the work, the performance bond may cover the costs associated with finding a new contractor for the project, or they may provide compensation to the obligee to use how they see fit.
How to Apply for a Performance Bond?
The process of applying for a performance bond is simple with TCE Insurance. Contact us to get in touch with one of our insurance experts, who will help you identify the level of protection you deserve. Our agents will provide you with thorough answers to your questions in order to get the best terms for your performance bond request. With our construction liability team on your side you have the advantage of their years of experience, knowledge, and expertise.