Construction Surety Bonds for Texas Contractors
Lavon Insurance helps Texas contractors, builders and property owners get bid, performance, payment and lien release bonds. Whether you’re bidding your first bonded job or growing your bonding capacity, we help you organize what the surety needs and move your request through underwriting.
Bonds for Every Stage of a Construction Project
The bond you need depends on where you are in the project and what obligation is being guaranteed.
Bid Bonds
Guarantees that, if you win the bid, you’ll sign the contract and provide the required performance and payment bonds.
Learn About Bid Bonds →Performance Bonds
Guarantees to the project owner that you’ll complete the work according to the terms of the contract.
Learn About Performance Bonds →Payment Bonds
Guarantees that qualifying subcontractors, laborers and material suppliers on the project will be paid.
Learn About Payment Bonds →Lien Release Bonds
Lets an owner or contractor bond around a mechanic’s lien so it’s removed from the property while the dispute proceeds against the bond.
Learn About Lien Release Bonds →How Construction Surety Bonds Fit Together
A contractor may need more than one bond on the same project.
Bid the Project
A bid bond is often submitted with your bid, commonly for 5% to 10% of the bid amount.
Win the Contract
The owner usually requires a performance bond, often for 100% of the contract price, before work begins.
Protect Payment Obligations
A payment bond is frequently issued with the performance bond to protect subcontractors and suppliers.
Resolve Lien Issues
If a mechanic’s lien is filed on the property, a lien release bond can remove the lien from the title.
Texas Construction Bond Requirements
Texas statutes set minimum bonding requirements for public works contracts and lien release bonds. Private owners can require bonds even when no statute does.
| Bond | When It’s Required in Texas | Statute |
|---|---|---|
| Performance bond | Public works contracts over $100,000, in the full contract amount | Gov’t Code §2253.021 |
| Payment bond | Public works contracts over $25,000, or over $50,000 for municipalities and certain joint boards, in the full contract amount | Gov’t Code §2253.021 |
| Lien release bond | Twice the lien amount; if liens total over $40,000, the greater of 1.5 times the liens or the liens plus $40,000 | Property Code §53.172 |
If a bid package mentions a bond, send us the bond requirements and bond form early. Waiting until the day before the bid opening can make a simple bond request much harder.
Where Construction Bonds Are Required
Public Construction
State agencies, counties, cities, school districts and other governmental entities require statutory performance and payment bonds once contracts reach the thresholds above.
Commercial Construction
Developers, general contractors and lenders often require subcontractors and GCs to provide performance and payment bonds on private commercial projects.
Private & Residential
Owners may require bonds on larger private or residential projects, and lien release bonds are common when a mechanic’s lien affects a sale or refinance.
How Much Do Construction Bonds Cost?
Bid bonds are often provided at little or no cost to contractors with an established surety relationship. Performance and payment bond premiums are usually a percentage of the contract price, commonly around 1% to 3% for qualified contractors, with lower rates on larger contracts.
Your actual rate is set by the surety based on your experience, financial strength, credit, work in progress and the project itself.
- Contract size and bond amount
- Years in business and similar completed projects
- Business and personal financial statements
- Personal and business credit
- Current backlog and work in progress
- Project type, duration and contract terms
What You’ll Need to Get a Construction Bond
Requirements depend on the bond amount, the contractor, the project and the surety company.
Contractor Experience
Years in business, completed projects, and experience with work of similar size and scope.
Financial Information
Business and personal financial statements, bank references and credit, depending on the bond amount.
Contract Documents
Bid specifications, contract amount, required bond form, project details and obligee information.
Work in Progress
A schedule of your current bonded and unbonded jobs, with contract values and percent complete.
Bonding Capacity
Contractors who bond regularly are set up with a single-job limit and an aggregate program limit.
Indemnity Agreement
The business and often its owners sign an indemnity agreement promising to repay the surety for any claims it pays.
Don’t Let Bonding Keep You From the Next Project
Contractors are often asked for bonds before they can bid, sign a contract or start work. Having a surety relationship in place makes it easier to say yes when the right opportunity comes along.
Lavon Insurance is a local, independent agency. We help you identify the bond being requested, gather what the surety needs and submit your application for underwriting.
- Bid bonds for upcoming projects
- Performance and payment bonds for awarded contracts
- Ongoing bonding programs for growing contractors
- Public and private project bonds
- Lien release bonds when a lien affects property
Insurance Contractors Also Need
Bonded contracts usually require proof of insurance too. We can quote your bonds and insurance together.
General Liability
Third-party bodily injury and property damage from your work and job sites.
General Liability Insurance →Workers’ Compensation
Coverage for employee injuries, often required by public and commercial contracts.
Workers’ Compensation →Commercial Auto
Coverage for the trucks and vehicles you use to get crews and materials to the job.
Commercial Auto Insurance →Inland Marine
Coverage for tools, equipment and materials moving between job sites.
Inland Marine Insurance →Commercial Umbrella
Extra liability limits above your primary policies to meet contract requirements.
Commercial Umbrella Insurance →All Commercial Insurance
Browse every type of business insurance we offer Texas companies.
View Commercial Insurance →Construction Surety Bond FAQs
What is a construction surety bond?
A construction surety bond is a three-party guarantee between the contractor (principal), the project owner (obligee) and the surety company. The surety guarantees that the contractor will meet a specific obligation, such as signing a contract, completing the work or paying subcontractors.
What is the difference between a bid bond and a performance bond?
A bid bond applies during bidding and guarantees you’ll sign the contract and provide the required bonds if you win. A performance bond applies after award and guarantees you’ll complete the work according to the contract.
What is the difference between a performance bond and a payment bond?
A performance bond protects the project owner by guaranteeing the work will be completed. A payment bond protects qualifying subcontractors, laborers and suppliers by guaranteeing they will be paid.
When does Texas require performance and payment bonds?
Under Texas Government Code §2253.021, governmental entities must require a performance bond on public works contracts over $100,000 and a payment bond on contracts over $25,000, or over $50,000 for municipalities and certain joint boards.
How much does a construction surety bond cost?
Performance and payment bond premiums are usually a percentage of the contract price, commonly around 1% to 3% for qualified contractors. Bid bonds are often provided at little or no cost to contractors with an established surety relationship. Your rate depends on your experience, finances, credit and the project.
What is a lien release bond in Texas?
A lien release bond, called a bond to indemnify against liens in the Texas Property Code, removes a mechanic’s lien from the property while the claimant’s rights shift to the bond. The bond is generally twice the lien amount, or for liens over $40,000, the greater of 1.5 times the lien or the lien plus $40,000.
Can a new contractor get a construction bond?
Often yes, starting with smaller projects. Contractors with limited bonding history may need to provide more information about their experience, finances and project management, and bonding capacity usually grows as you complete bonded work.
What is bonding capacity?
Bonding capacity is the amount of bonded work a surety will support for a contractor, usually expressed as a single-job limit and an aggregate limit for all bonded work in progress.
What should I send when I need a bond?
Send the project name, obligee, bid or contract amount, required bond amount, bond form, bid date and any bid or contract documents that describe the bonding requirement.
Construction Bonds in Lavon, Dallas and Across Texas
Lavon Insurance helps contractors statewide, including these North Texas communities:
Get Help With Your Construction Surety Bond
Whether you need a bid bond for the next bid opening, performance and payment bonds for an awarded contract, or a lien release bond, we can help you start today.
Bond availability, approval, premium, limits, collateral and underwriting requirements vary by surety, applicant and project. Statutory thresholds are summarized for general information and are not legal advice; review your contract documents and consult an attorney as needed.