California Performance Bond Guide
Performance bonds are common on California public works and many private construction contracts. This concise, scannable guide explains what a performance bond does, who needs one, how cost is determined, what underwriters review, a short checklist you can act on, and filing tips to avoid rejections.
California performance bond
A CA performance bond guarantees the contractor (principal) will finish the work per contract terms. It protects the owner (obligee) from financial loss if the contractor defaults or fails to meet contractual obligations.
California bond cost
Premiums depend on the bond amount, contractor credit, company financials, experience, and claims history. Strong financials and a clean claims record lower annual premiums; weak credit can require higher rates or collateral.
Performance bond cost
Typical premium ranges vary by risk and credit — small public jobs can be inexpensive while large infrastructure projects carry higher fees. Plan for additional underwriting time and possible collateral on larger or higher‑risk projects.
CA bond underwriting
Underwriters evaluate financial statements, work history, backlog, references, and key personnel. For larger bonds expect compiled or audited financials, a schedule of work‑in‑progress, and trade references.
CA bond application
Provide accurate contract details: obligee name, contract amount, scope, start and completion dates. 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 clerk, sometimes delivered to the owner. The most common reasons for rejection are incorrect form, misnamed obligee, or missing signatures.
CA payment bond
Many public projects require payment bonds in addition to performance bonds to protect subcontractors and suppliers. Payment bonds often equal 100% of the contract on public works.
Performance bond checklist
Confirm the exact obligee name and the required bond form in the contract packet.
Gather business formation docs, EIN, contractor license, and local registrations.
Prepare 3–12 months of bank statements and the latest tax return.
Compile backlog, key project references, and list of key personnel.
Sign credit authorizations for principals and request a preliminary broker quote.
CA Performance bond alternatives
If traditional surety underwriting is constrained by credit, options include posting collateral, obtaining a partial collateral arrangement, parent company guarantees, or third‑party guarantees. Discuss alternatives early with a surety broker.
Practical tips for contractors
Confirm obligee wording before ordering the bond.
Start bonding discussions as soon as you have 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 a California surety broker, and authorize credit checks so underwriting can proceed.