What is a Performance Bond?

A Performance Bond (also known as a Surety Bond) is a financial guarantee designed to protect the Employer or Client if a Contractor fails to meet the terms of their contract. In simple terms, it is a commitment from a Surety (the guarantor) to pay compensation to the Employer if the Contractor cannot complete the project as agreed — due to insolvency, default, or another breach of contract.

In the construction industry, Performance Bonds are typically issued for 10% of the contract value and serve as reassurance that the Contractor will deliver the project in line with the agreed specifications and timescales.

While often mistaken for insurance, Performance Bonds are in fact tripartite agreements involving the Employer, Contractor, and Surety Company. If an issue arises, the Contractor is first given the opportunity to correct it. Should that fail, and the bond is called upon, the Surety investigates and, if the claim is valid, compensates the Employer for the proven losses.

Nationwide Sureties assists contractors and employers in obtaining the right bond quickly and efficiently. Their experienced team ensures that every bond is clearly worded, compliant, and tailored to protect all parties involved — providing confidence that each project is financially safeguarded from start to finish.

For more information on What is a Performance Bond? talk to Nationwide Sureties