Arizona Performance Bond Guide
Performance bonds are commonly required on Arizona public works and many private construction contracts. This short, scannable guide explains what a performance bond does, who needs one, how cost is set, what underwriters review, a simple checklist you can act on, and filing tips to avoid rejections.
AZ performance bond
An AZ performance bond guarantees the contractor will complete the work according to contract terms and specifications. It protects the project owner from extra costs if the contractor defaults or fails to perform.
Arizona bond cost
Premiums are driven by the bond amount, contractor credit, company financials, experience, and claims history. Strong financials and a clean claims record usually produce lower rates; weaker credit may mean higher premiums or collateral.
Performance bond cost
For many contractors market premiums range from roughly 0.5% to 3% for qualified work on standard projects. Large contracts, complex scopes, or low credit scores push rates higher and lengthen underwriting time.
AZ bond underwriting
Underwriters evaluate tax returns, balance sheets, backlog, work history, trade references, and key personnel. For larger bonds they often request compiled or audited financials and a detailed work‑in‑progress schedule.
AZ bond application
Provide exact contract details: obligee name, contract amount, scope, start and completion dates, and delivery instructions. Include 3–12 months of bank statements, the most recent tax return, and signed credit authorizations for principals.
Performance bond filing
Deliver the executed bond exactly as the contract requires—sometimes recorded with the county, sometimes delivered to the owner. The most common rejections are incorrect forms, misnamed obligees, or missing signatures.
AZ payment bond
Many Arizona public projects require payment bonds in addition to performance bonds to protect subcontractors and suppliers. Payment bonds often equal 100% of the contract amount for government work under state statutes.
Performance bond checklist
Verify the exact obligee name and required bond form in the solicitation or contract packet.
Gather business formation documents, EIN, contractor license, and local registrations.
Prepare 3–12 months of bank statements and the latest tax return.
Compile backlog, key project references, and a list of key personnel.
Sign credit authorizations for principals and request a preliminary broker quote.
Performance bond alternatives
If traditional surety underwriting is constrained by credit, options include posting collateral, partial collateral arrangements, parent company guarantees, or third‑party guarantees. Discuss alternatives early with a surety broker to avoid delays.
Practical tips for contractors
Confirm obligee wording before ordering the bond. Start bonding discussions as soon as you receive a notice of award. Keep a rolling prequalification packet ready to speed approvals. Order larger bonds several business days before deadlines.
Action: get the exact bond form from the contract, assemble the checklist documents, contact an Arizona surety broker, and authorize credit checks so underwriting can proceed.