What is a Performance Bond?
A Construction Performance Bond is a guarantee, typically with a value of 10% of the contract price (though this may vary in some cases). It is designed to offer protection to the employer/ beneficiary against any losses and/or damages sustained as a result of the contractor failing to perform its contractual obligations.
How do Performance Bonds work?
A Construction Performance Bond is a tripartite agreement and is designed to offer some protection to the beneficiary in cases were the contractor fails to perform the contract.
The reasons for such failure could be insolvency, default or any other actions as defined in the contract or bond wording.
In the case of a dispute, the first action would be for the contractor/sub-contractor to remedy the issue, if that fails and a call is made on the bond the surety will investigate the matter, if the claim is valid the damages would be established and ascertained in accordance with the contract.
What We Require From You
Provide us the details of the particular operation which is the subject of the performance bond requirement, including bond amount and period for which it will be required, together with a completed application form plus:
A copy of the performance bond wording required by relevant body
A copy of your last published audited accounts (if you are part of group accounts too)
A copy of your latest management accounts
On receipt of this information, the performance bond application will be submitted to our panel of underwriters for their consideration. On the successful underwriting, we should be in a position to offer competitive non-binding indications of terms, as quickly as possible.
Once you have accepted our terms and provided any additional information requested, we will send you any legal documents that need to be executed (such as counter-indemnities) and an invoice for the premium.
Following receipt of the legal paperwork and premium, we will issue the performance bond.