Performance Bond Calculator

A combined performance and payment bond quote depends on the required bond amounts, contract, carrier and underwriting. A carrier may quote the bonds together, but this calculator does not establish the combined price or promise a free payment bond. Ask your agent for the complete premium and any fees before purchase.

No. Under an AIA A312 performance bond the surety is not obligated until the obligee formally declares the contractor in default, terminates the contract for default, and notifies the surety. The surety then chooses among several remedies: (1) arrange for the original contractor to finish with surety financing, (2) take over completion directly (a "takeover" where the surety steps into the principal’s shoes and subcontracts the work), (3) tender a replacement completion contractor, or (4) pay a penal-sum settlement. If the owner skips the default-and-notice conditions precedent, the surety’s liability can be wholly or partially discharged — this is one of the most litigated issues in performance-bond claims.

This calculator assumes lower base percentages for larger contracts to illustrate how size can affect a premium scenario. That is a modeling choice, not a guaranteed carrier pricing rule. The carrier sets the actual price after reviewing your project and application.

Both inputs change this illustrative model. Real underwriting can also consider financial statements, experience, project terms and other information. The model does not predict how much weight a particular carrier gives your credit or contract size, and a score does not guarantee a rate or approval.

Private owner practice varies widely. Institutional owners (hospitals, universities, developers with lender covenants) often require a dual-obligee rider naming both the owner and the construction lender, so the lender can trigger surety performance if the owner stops paying or goes bankrupt. Some private contracts import Miller-Act-style 100%-of-contract bonding; others negotiate lower penal sums or accept subguard / SDI (subcontractor default insurance) instead. Step-in rights are a contract matter — they are not automatic under the bond. If the AIA A312 form is used, the surety’s remedies (including engaging a completion contractor) are spelled out in Section 5 of the bond and require the owner to first comply with the conditions precedent in Section 3.

Warranty coverage depends on the executed bond, construction contract and applicable law. Do not assume a performance bond covers every post-completion defect or automatically ends at final completion. AIA A313 is a separate warranty bond tied to the contractor’s contractual warranty obligations; it does not cover supplier or manufacturer warranties. Ask your agent to review the required form, duration and pricing for your project.

This matters for the payment bond side of a combined P&P program, but it flows through to performance bond claims where subs walk off for non-payment. "Pay-when-paid" is a timing clause — it delays a subcontractor’s payment until the GC is paid but does not permanently excuse the obligation. "Pay-if-paid" is a risk-shifting clause — the GC’s duty to pay the sub is conditional on the GC being paid by the owner. States split on enforcement: some (New York, California, Wisconsin) void pay-if-paid against payment-bond claims as contrary to public policy; others (Florida, Texas with strict drafting) enforce it. If a contract imposes pay-if-paid, confirm in writing whether the payment bond surety can raise that defense against second-tier claimants — because if it can, the bond offers materially less protection than the penal sum suggests.