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A performance bond is a surety bond issued by an insurance company to guarantee satisfactory completion of a project by a contractor. For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building. If the contractor fails to construct the building according to the specifications laid out by the contract (most often due to the bankruptcy of the contractor), the client is guaranteed compensation for any monetary loss up to the amount of the performance bond. Performance bonds are commonly used in the development of real property, where an owner or investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event (such as insolvency of the contractor). The term is also used to denote a collateral deposit intended to secure a Futures contract, commonly known as margin. Performance bonds have been around since 2,750 BC and, more recently, the Romans developed laws of surety around 150 AD, the principles of which still exist.

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The cost of a performance bond is based on several factors. The cost of the bond is based on its face value, expected length of project, capability and expertise of the principal (the party purchasing the bond), and the creditworthiness and liquid assets of the principal are all contributing factors. There is no standard rate for a performance bond, although surety companies have set rates per thousand of coverage by type of bond from which they may take a deviation based on the nature of the risk to be considered. In addition to the bond premium, collateral may be required to be posted. Mark Walters West Insurance Group mwalters@westagy.com

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Q: What is the cost of a performance bond?
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Related questions

Do you get the performance bond money back?

No, the cost of a requested performance bond should be itemized in the proposal.


How to make performance bond?

There is not a way for the general public to make a performance bond. A performance bond is issued by an insurance company or a bank.


Is a performance bond and warranty bond the same?

no


What are the advantages of a performance bond?

A performance bond is used to ensure a customer winds up with a finished product when undergoing a project involving a contractor. An advantage is there is no deductible when using a performance bond, and you have lower premium costs.


If you have a project to redo your pool area and condo parking lot with pavers Do you need a performance bond?

A performance bond protects the association: an association would not be protecting the best interests of its investors if it hired a vendor with no performance bond.


What is the difference between performance bond and performance bank guarantee?

The performance bond is what you might get depending on interest rates. The bank guarantee is more secure and will be guaranteed money regardless of what the economy does.


Is a bond cost a direct cost?

No bond cost is not a direct cost as it is not directly related with production of goods.


Who issue performance bond?

A performance bond is generally entered by a financier, on behalf of an account party, with a beneficiary to secure the performance of that account party's obligation to the beneficiary arising from an underlying contract or instrument.


What is a payment bond and a Performance bond?

Performance bonds protect the obligee (obligee is the entity requiring the bond)Requiring a performance and payment bond will insure that the project will be completedIf the principal defaults in its performance set forth in the contract to the obligee and the contractor is unable to successfully perform the job, the surety assumes the contractor's responsibilities and ensures that the project is completed. Below are the four types of contract bonds that may be required1. Bid Bond which guarantees that the bidder on a contract will pierce into the contract and equip the mandatory payment along with performance bonds. 2. Payment Bond which guarantees payment from the contractor of money to persons who furnish labor, materials equipment and also supplies for use in the performance of the contract. 3. Performance Bond which warranties that the contractor will hold out the contract in pact with its terms. 4. Ancillary Bonds which are auxiliary as well as crucial to the performance of the contract. Source http://www.integritybonds.com


What are the release dates for The Cisco Kid - 1950 Performance Bond 2-1?

The Cisco Kid - 1950 Performance Bond 2-1 was released on: USA: 3 September 1951


How much does it cost to bond an employee?

It can cost a couple hundred dollars to thousands of dollars depending on the type of bond and the amount. The basic cost is a couple hundred dollars for a fairly simple and low bond.


What was Daniel Craig's second performance as James Bond?

Quantum of Solace