California Contractor Performance Bond
EVERYBOND Surety & Insurance Solutions
What Is a California Construction Performance Bond?
A California construction performance bond is a contract bond issued by a surety company. It guarantees that the contractor will complete the project as agreed.
If the contractor defaults, the surety steps in.
Many projects require both a California performance and payment bond. The performance bond protects the project owner. The payment bond protects subcontractors and suppliers.
Performance bonds are common for:
- Public works projects
- Municipal construction
- School districts
- Infrastructure projects
- Large commercial developments
For many projects involving public entities, bonding is required by law.
Performance Bond for California Public Works
A performance bond for California public works is often required under state rules and the California Public Contract Code.
Public agencies use bonds to protect taxpayer funds.
Federal projects may fall under the Miller Act, while California state and local projects follow state bonding rules.
Public works projects typically require both performance and payment bonds before construction begins.
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The Parties Involved
Every California contractor performance bond has three parties:
- Principal – The contractor
- Obligee – The project owner or public entity
- Surety – The company that issues the bond
If the contractor fails to complete the job, the surety may:
- Provide funds to complete the work
- Hire another contractor
- Pay damages up to the bond amount
Unlike insurance, the contractor must repay the surety for valid bond claims.
How Contractors Bonding Works
Before issuing the bond, the surety reviews:
- Financial strength
- Credit history
- Experience
- Current workload
This process is called contractors bonding underwriting.
If approved, the contractor pays a bond premium. The premium is usually a percentage of the contract price.
If the contractor fails to meet contract terms, the project owner may file a claim. The surety investigates and decides how to resolve the issue.
Cost of a California Performance Bond
The cost of a California contractor performance bond depends on:
- Total contract price
- Credit score
- Financial statements
- Project size
- Industry experience
Bond premiums typically range from 1% to 3% of the contract price for qualified contractors.
Higher-risk projects may require additional bonding review or financial documentation.
When Are Performance Bonds Required?
Performance bonds are often required for:
- Public works projects
- State and municipal construction
- School district contracts
- Large commercial jobs
Many public entities require bonding before awarding contracts.
In some cases, contractors may also need related bonds such as:
- License bonds
- A contractor license bond
- Payment bonds
- Other project-specific guarantees
Bond requirements vary based on the project and the agency involved.
Why Choose EveryBond?
Securing a California contractor performance bond should not slow down your project.
EveryBond provides:
- Fast approvals
- Competitive bond premiums
- Access to A-rated surety carriers
- Statewide California service
- Clear guidance through the bonding process
We simplify contractors bonding so you can focus on building.
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Frequently Asked Questions
It ensures the contractor completes the project according to the contract. If the contractor fails, the surety protects the project owner financially.
A performance bond guarantees completion of the work. A payment bond guarantees subcontractors and suppliers are paid.
Many California public works projects require both.
Bond claims happen when a project owner believes the contractor did not meet contract terms. The surety investigates before paying any claim.
If payment is made, the contractor must reimburse the surety.
The bond premium is based on the contract price, credit strength, and financial history. Most qualified contractors pay between 1% and 3%.