A contract surety bond is a three-party guarantee that a construction project will be completed and paid for. The contractor (principal) buys the bond, the project owner (obligee) is protected by it, and the surety company guarantees it. The four main types are bid, performance, payment, and maintenance bonds, and premiums typically run 0.5%–3% of the contract value for well-qualified contractors.
Unlike insurance — which pools risk — a surety bond is closer to a line of credit. The surety expects to recover any loss it pays out, which is why bonding involves a credit-style review of your finances and track record. The upside: once a surety knows and trusts you, bonding gets faster and your capacity grows.
The three parties
- Principal — you, the contractor who promises to perform.
- Obligee — the project owner who requires the bond and is protected.
- Surety — the company backing the guarantee, placed by BettrBonds.
The four contract bond types
- Bid bond — guarantees you'll honor your bid and post the final bonds if you win. Usually free.
- Performance bond — guarantees the project is completed per the contract. The core bond.
- Payment bond — guarantees subs and suppliers get paid. Usually bundled with the performance bond.
- Maintenance bond — guarantees the work stays defect-free for a set period after completion.
Which bond do you need?
- Bidding a public or commercial job that requires bonding? Start with a bid bond to submit, then a performance and payment bond if you win.
- Already won a contract that requires a bond? You need a performance & payment bond — we can often turn these around quickly.
- Asked to guarantee your work after completion? That is a maintenance bond.
- Need a bond to get or renew your state license? That is a contractor license bond, which is separate from project bonds.
Not sure which applies? Tell us about the job and we will tell you exactly what you need — no obligation.
Frequently asked
What is a contract bond?
A contract surety bond is a three-party guarantee that a construction project will be completed and paid for, involving the contractor, the project owner, and the surety company.
How much does a contract bond cost?
Contract bonds typically cost 0.5%-3% of the contract value, with lower rates on larger contracts.
What is the difference between a contract bond and insurance?
Insurance pools risk; a surety bond is closer to a line of credit, and the surety expects to recover any loss it pays out.
Ready to get bonded?
Tell us about the job — a real bond expert responds the same business day.