What is bonding?
It’s a guarantee of correct performance of an obligation. That obligation may arise out of a contractual relationship, or it may exist because of a statute or ordinance governing the Principal’s conduct.
What is a bid bond?
A bond required of a contractor submitting the lowest bid on a project. If the contractor then refuses to undertake the project, the bid bond assures that the developer will be paid the difference between the lowest bid and next lowest bid. The bid bond encourages contractors to make serious bids and live up to their obligations.
What is a performance bond?
A bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor. For example, a contractor may issue a bond to a client for whom a building is being constructed. If the contractor fails to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary loss. A Performance Bond guarantees the faithful performance of the contract and payment (payment bond) of materials and labor by the contractor to all subcontractors and material suppliers. The bond is submitted by the winning bidder upon award of the contract. The Performance & Payment Bond are typically issued together, as they are so closely related.
What is a payment bond?
Guarantees payment to laborers, suppliers, and subcontractors in the event of the contractor defaulting. Typically, a payment bond is issued with the performance bond, termed a “Performance & Payment Bond”.
How do I obtain a bid bond or performance bond?
The process of obtaining a surety bond is very similar to obtaining a bank loan. Call us and we can walk you through the process which will save you time and money!
Can McCormick Insurance help me get my license bond for my contractors license? Answer: Yes.
We have excellent sources for license bonds for contractors needing to renew their contractors license or new contractors just getting licensed.
What does a surety bond cost?
Surety bond premiums vary from one surety to another, but can range from one-half of one percent to two percent of the contract amount, depending on the size, type, and duration of the project and the contractor. In many cases, performance bonds incorporate payment bonds and maintenance bonds. When bonds are specified in the contract documents, it is the contractor’s responsibility to obtain the bonds. The contractor generally includes the bond premium amount in the bid and the premium generally is payable upon execution of the bond. If the contract amount changes, the premium will be adjusted for the change in contract price. Payment and performance bonds typically are priced based on the value of the contract being bonded, not necessarily on the size of the bond. Commercial bonding has a greater range of pricing; high risk programs have a high premium and 10% collateral.
How does a surety bond differ from insurance?
With insurance, the insurance company indemnifies the insured against loss. As an example, if the insured incurs a loss by fire, and has purchased the appropriate insurance, the insurance company will reimburse the insured for their loss up to the insurance policy limit.
With a bond, the insurance company (Surety) will reimburse a third party (Obligee) for the loss caused to them by the Principal. In the event the Surety is required to pay the Obligee on behalf of the Principal, the Principal is required to reimburse the Surety. A Surety is essentially extending credit to the Principal. The Surety is not insuring the Principal against loss. insurance companies in san diego that write surety bonds.
We have access to commercial surety bond companies in San Diego as well as carriers that are nationwide and highly rated. We also have access to commercial Surety Bond companies in San Diego CA.
Recent bonds we’ve done:
- $352,991 Grading, Subdivision Improvement, Monument, Subdivider, Faithful Performance and Permit Bond for mixed use project in the City of Encinitas
- $25,000 Escrow Bond
- $85,000 Public works contract Morongo School District
- $65,000 Public works contract City of Ontario
- $142,000 Grading Permit Subdivision Bond for City of San Diego
- $377,000 Grading Permit Subdivision Bond for City of San Diego
- $269,000 Grading Permit Subdivision Bond for City of San Diego
- $290,000 Construction Performance Bond for UCSD project in La Jolla
- $240,566 Grading Permit Bond for City of Escondido for non-profit organization
- $110,251 Grading Bond for City of San Diego in Downtown San Diego
- $521,302 Grading, Subdivision Improvement, Monument, Subdivider, Faithful Performance and Permit Bond for mixed use project in the City of Encinitas
- $150,000 Grading Permit Bond
- $54,000 DRE Condo Association Bond
- $50,000 Motor Vehicle Dealer Bond with impaired credit
- $100,000 Credit Services Bond
- $25,000 Finance Lender
- $27,000 Farm Bond
- $10,000 Wholesale Dealer Bond
- $25,000 NDIEC Bond for the CPUC
- $5,000 Defective Title Bond
- $12,500 Contractor’s Bond
- $1,000,000 Letter of bondability (Good guy letter) for Bid Bond
- $400,000 Letter of bondability for Contractor’s Bid Bond requirement
- $12,500 Contractor’s License Bond with impaired credit
- $25,000 Legal Document Assistant surety bond with impaired credit
- $3,000 Employment Agency Bond
- $50,000 Credit Services Bond (Impaired credit – saved this client $3500 and helped them avoid a $50,000 collateral deposit)
- $25,000 California CPUC Performance Bond for CPCN
- $25,000 California CPUC Performance Bond for WIR
- $22,000 Probate VA Bond
- $15,000 Traffic School Bond
- $150,000 Conservatorship Bond
- $90,000 Appeal Bond
- $20,000 Auctioneer/Auction Bond