Many contractors are surprised to learn that insurance and bonding are not the same thing. While insurance protects the contractor from losses, bonds protect the project owner, general contractor, or suppliers. Performance and payment bonds are often required to bid on public projects and increasingly on private commercial jobs as well.
A performance bond guarantees the job will be completed according to contract. A payment bond ensures subcontractors and suppliers get paid. If a claim occurs, the surety may initially step in—but unlike insurance, the contractor is ultimately responsible for repaying the surety. That’s why bonds are underwritten based on financial strength, experience, and reputation.
Building bonding capacity takes time and planning. Clean financials, strong insurance programs, and consistent project history all matter. Contractors who establish relationships with reliable surety partners gain access to larger, more profitable jobs—and avoid losing bids simply because they aren’t bondable.
Stay Tuned For Other Great Reads In This Month’s Newsletter
- Bonding Basics: Why Contractors May Need Bonds in Addition to Insurance
- Insurance Resolutions: Top 5 Ways to Save on Coverage in 2026
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