Bid and Performance Bonds in Texas
Factors That Affect Bond Pricing
The cost of bid, payment, and performance bonds depends on several key factors related to your business and project. Surety companies consider:
- Bond Amount – The premium is typically a small percentage of the total bond amount, often between 1–3%.
- Contract Size & Scope – Larger or more complex projects may carry higher premiums due to increased performance and financial risk.
- Type of Work – Specialized trades or high-risk construction types can impact pricing based on claim history and industry volatility.
- Contractor’s Credit & Financials – Your credit score, business financials, and track record play a major role in determining your bond rate and approval speed.
- Project Location – Regional economic conditions and local regulations in Texas can influence surety underwriting and bond pricing.
- Bond History & Experience – Contractors with a solid reputation and history of completed projects often qualify for lower rates and faster approvals.
Typical Premium Range
Bid, payment, and performance bond premiums usually range from 1% to 3% of the total bond amount, depending on the contractor’s financial strength and project scope.
A $100,000 project bond may cost between $1,000 and $3,000, depending on underwriting factors such as the contractor’s financials and work history.
A $1 million bond can range from $10,000 to $30,000, with experienced and financially strong contractors often qualifying for the lowest rates.
Ways to Manage Bond Costs
Contractors can lower their bond premiums and improve approval odds by:
- Maintaining strong credit and financial statements. Sureties reward contractors who demonstrate financial stability and consistent performance.
- Building a proven track record. Completing projects on time and without claims helps establish credibility with underwriters.
- Choosing the right bond amount. Avoid overestimating project values—bonding only what’s required keeps costs down.
- Working with a trusted surety partner. Ironwood Insurance helps contractors find competitive rates through established relationships with top-rated bond providers.
Don’t Cut Corners on Bonding
Skipping or minimizing required bonds can cost far more than the premium itself. Without proper bid, payment, or performance bonds, contractors risk losing project opportunities, breaching contract terms, or damaging their reputation. A well-structured bond program not only keeps you compliant—it protects your business relationships and ensures you can keep building with confidence.
Get an Accurate Bond Quote
Every project has its own requirements. Ironwood partners with leading surety carriers experienced in Texas construction to provide precise, competitive bond quotes tailored to your business and project scope.
Frequently Asked Questions About Bid & Performance Bond Costs
What’s the difference between bid, payment, and performance bonds?
A bid bond guarantees that a contractor will honor their bid and sign the contract if awarded. A performance bond ensures the project is completed as agreed, while a payment bond protects subcontractors and suppliers from nonpayment.
How much do bid and performance bonds cost?
Bond premiums typically range from 1% to 3% of the total contract value, depending on credit, financial strength, and project type. Strong financials and a solid track record often qualify for better rates.
Do I need separate bonds for each project?
Yes. Most bonds are project-specific and tailored to the contract value and scope. However, contractors who frequently bid on multiple projects may qualify for a bonding line, allowing faster approvals for future bids.
How long does the approval process take?
For smaller projects, bond approvals can often be completed within 24–48 hours. Larger or more complex contracts may require additional underwriting, but Ironwood helps streamline the process to avoid project delays.