Typical Performance Bond Cost

There are many factors that go into determining the cost of a performance bond, such as (but not limited to) the amount, contract type, state, Surety Company’s filed rate, principal’s credit and / or financial standing, past job history of the contractor, current work on hand, and other underwriting factors as well as any fees charged by the agent or broker.

Rates for performance bonds can vary depending on the qualification of the contractor, as well as type and size of the contract. The average rates and costs can range from 1% - 5%. Keep in mind that these are only averages, whereas, a highly qualified contractor may obtain lower bond rates compared to a contractor with credit issues or financial deficiencies. Viking Bond Service, Inc. will always offer the program that is best suited for the contractor at the lowest rate possible.

Commissions are paid to suitably licensed agents and agencies when issuing a performance bond in many cases. A commission is a predetermined percentage of the premium as per an agency agreement between surety and agent or between broker or MGA and agent (sometimes both).
Fees are charged by agencies or brokers in some cases to supplement or replace commissions. In many instances small commissions must be split between agencies, brokers, and other licensed third parties during the processing of a single bond file. Basic operating costs and overhead, for instance; overnight fees, charges for credit reports, long distance faxes as well as phone calls.  In addition there are paid producers who review files and coordinate with principals, sureties, and agents during the processing of bond files. These costs in addition to multiple other expenses contribute to the need for charging fees in certain instances.

Feel free to let our contract surety experts help with any questions you may have on the cost of a performance bond or any other type of bond. We can generally provide an idea of the pricing as well as any other requirements that the potential surety may have. This provides an opportunity to save the client time and headache in the bonding process while potentially opening up a new relationship between contractor and surety. Give is a call today for more information on performance bonds and associated costs.