Construction Surety Bonds for Texas Contractors
From bidding on your next project to satisfying contract requirements and resolving a mechanic’s lien issue, construction surety bonds play an important role throughout the life of a construction project.
Lavon Insurance helps Texas contractors, builders and property owners obtain bid, performance, payment and lien release bonds with straightforward guidance and access to experienced surety markets.
Bonds for Different Stages of a Construction Project
Construction surety bonds do not all serve the same purpose. The bond you need depends on where you are in the project and what obligation needs to be guaranteed.
Bid Bonds
A bid bond is commonly required when a contractor submits a bid for a construction project. It provides assurance relating to the bidder’s obligations if the contract is awarded, including entering into the contract and providing required follow-on bonds when applicable.
Learn About Bid Bonds →Performance Bonds
Performance bonds provide financial assurance to the obligee regarding covered performance obligations under the bonded construction contract. They are frequently required on public projects and may also be required on commercial or private construction work.
Learn About Performance Bonds →Payment Bonds
Payment bonds provide financial protection relating to covered payment obligations involving qualifying subcontractors, laborers and material suppliers working on a bonded construction project.
Learn About Payment Bonds →Lien Release Bonds
A lien release bond may be used to bond around certain mechanic’s lien claims so that the lien can be discharged from the real property while the underlying payment dispute proceeds against the bond.
Learn About Lien Release Bonds →Don’t Let Bonding Requirements Keep You From the Next Project
Contractors are often asked to provide bonds before they can bid on a project, execute a contract or begin construction. Having a surety relationship in place can make it easier to respond when an opportunity requires bonding.
Lavon Insurance can help you identify the bond being requested, organize the information the surety may need and submit your application for underwriting.
- Bid bond assistance for upcoming projects
- Performance and payment bond applications
- Support for contractors seeking ongoing bonding capacity
- Surety solutions for qualifying public and private projects
- Lien release bond assistance when a mechanic’s lien affects property
How Construction Surety Bonds Fit Together
A contractor may encounter more than one bond during the life of the same project.
Bid the Project
A bid bond may be required as part of the contractor’s bid submission.
Win the Contract
The project owner may require a performance bond before construction begins.
Protect Payment Obligations
A payment bond may be required to provide protection relating to covered labor and material obligations.
Resolve Lien Issues
If a qualifying mechanic’s lien later affects the property, a lien release bond may provide a way to bond around the lien.
Construction Bonds Are Used Across Many Types of Projects
Public Construction
Government contracts may require statutory performance and payment bonds when the applicable contract thresholds and requirements are met.
Commercial Construction
Developers, general contractors and project owners may require contract bonds on private commercial projects.
Private & Residential Projects
Surety bonds may also be used on qualifying private projects when owners or contracting parties want additional financial assurance.
Texas Public Works Bond Requirements
Texas Government Code Chapter 2253 requires performance and payment bonds on certain public works contracts.
Under the current statute, a governmental entity generally requires a performance bond when the public works contract exceeds $100,000.
Payment bond thresholds depend on the governmental entity. Certain public contracts exceeding $25,000 require payment bonds, while the threshold for municipalities and certain joint boards is generally above $50,000.
Bond requirements can vary by project and contracting authority, so contractors should always review the actual bid specifications and contract documents.
What May Be Needed to Obtain a Construction Bond?
Requirements depend on the bond amount, contractor, project and surety company.
Contractor Experience
The surety may evaluate your history, completed projects, years in business and experience with projects of similar size and scope.
Financial Information
Depending on the bond and amount, underwriting may involve business or personal financial information, credit and financial statements.
Contract Documents
Bid specifications, contract amounts, bond forms, project details and obligee information may be required.
Work in Progress
Sureties may review your current backlog and existing bonded and unbonded projects.
Bonding Capacity
Contractors seeking repeat bonding may be evaluated for both single-project and aggregate bonding capacity.
Indemnity
Surety bonds generally involve indemnity obligations, and the surety may require appropriate indemnitors as part of the underwriting process.
A Local Insurance Agency That Understands Contractor Bonding
Contractors already have enough to manage. Bonding should not be another mystery.
Lavon Insurance works with Texas businesses and contractors on commercial insurance and surety bond needs.
Whether you are bidding your first bonded project, adding another bonded contract to your backlog or trying to resolve a lien affecting a property, we can help you understand what the surety is requesting and move the application through the underwriting process.
Our goal is simple: help you obtain the bond you need so you can concentrate on completing the work and growing your business.
Construction Surety Bond FAQs
What is a construction surety bond?
What is the difference between a bid bond and a performance bond?
What is the difference between a performance bond and a payment bond?
Are performance and payment bonds usually issued together?
What is a lien release bond?
Do all construction projects require surety bonds?
How much does a construction surety bond cost?
Can a new contractor qualify for a construction bond?
What should I send when I need a bond?
Get Help With Your Construction Surety Bond
Whether you need a bid bond for tomorrow’s bid opening, performance and payment bonds for an awarded contract, or a lien release bond to address a mechanic’s lien, Lavon Insurance can help you start the process.
Bond availability, approval, premium, limits, collateral and underwriting requirements vary by surety, applicant and project.