Florida Performance and Payment Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Florida performance and payment bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

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FREE PERFORMANCE & PAYMENT BOND QUOTE

What Are Florida Performance & Payment Bonds?

A Florida performance and payment bond is a single construction surety bond that provides project owners the same financial protection as can be obtained through two separate bonds: a performance bond and a payment bond. A performance and payment bond ensures that the project owner (known as the bond’s “obligee”) isn’t burdened with financial losses resulting from a contractor’s failure to complete a job in accordance with the construction contract or failure to pay their subcontractors and suppliers. The bond: 

  • Legally obligates the general contractor (the bond’s “principal”) to comply with applicable laws and regulations and the terms of the construction contract
  • Compensates the injured party when a valid claim for damages is filed
  • Prevents mechanic’s liens on the property

 

Who Needs One?

Florida’s version of the federal Miller Act requires a performance and payment bond for any state-funded construction project valued at $100,000 or more. The amount of the bond must be equal to the value of the contract. However, as long as a project is valued at less than $200,000, the contracting authority has some discretion in setting the required bond amount or allowing exemptions. 

The required amount for Florida performance and payment bonds is capped at $250,000, even for contracts valued well in excess of that amount. 

It is becoming increasingly common for private project owners, like public project owners, to require their contractors to provide a performance and payment bond.

How Does a Performance & Payment Bond Work?

There is a third party to every Florida performance and payment bond, along with the obligee and the principal. This is the “surety,” the bond’s guarantor. While the surety is indemnified against legal responsibility for claims, the bond guarantees payment of valid claims. The legal obligation to pay all valid claims belongs exclusively to the principal. 

In practice, the surety will extend credit to the principal for the purpose of paying a claim the surety has verified is valid. The surety pays the claimant directly, which creates a debt that the principal must repay, typically by making scheduled installment payments. The surety can take legal action to recover the claim amount if the principal doesn’t repay the debt as agreed.

How Much Does It Cost?

Multiplying the required bond amount (set by the obligee) by the premium rate (assigned by the surety) gives you the annual premium for a Florida performance and payment bond. The surety determines the appropriate premium rate through an underwriting risk assessment. The greatest risk is not being repaid for claims paid on the principal’s behalf. 

The key factor in determining the premium rate is the principal’s personal credit score. A high credit score is a good sign of low risk, which means a low-interest rate is appropriate. However, a low credit score means greater risk and warrants a higher premium rate.

The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Florida performance and payment bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

FREE PERFORMANCE & PAYMENT BOND QUOTE

What Are Florida Performance & Payment Bonds?

A Florida performance and payment bond is a single construction surety bond that provides project owners the same financial protection as can be obtained through two separate bonds: a performance bond and a payment bond. A performance and payment bond ensures that the project owner (known as the bond’s “obligee”) isn’t burdened with financial losses resulting from a contractor’s failure to complete a job in accordance with the construction contract or failure to pay their subcontractors and suppliers. The bond: 

  • Legally obligates the general contractor (the bond’s “principal”) to comply with applicable laws and regulations and the terms of the construction contract
  • Compensates the injured party when a valid claim for damages is filed
  • Prevents mechanic’s liens on the property

 

Florida’s version of the federal Miller Act requires a performance and payment bond for any state-funded construction project valued at $100,000 or more. The amount of the bond must be equal to the value of the contract. However, as long as a project is valued at less than $200,000, the contracting authority has some discretion in setting the required bond amount or allowing exemptions. 

The required amount for Florida performance and payment bonds is capped at $250,000, even for contracts valued well in excess of that amount. 

It is becoming increasingly common for private project owners, like public project owners, to require their contractors to provide a performance and payment bond.

There is a third party to every Florida performance and payment bond, along with the obligee and the principal. This is the “surety,” the bond’s guarantor. While the surety is indemnified against legal responsibility for claims, the bond guarantees payment of valid claims. The legal obligation to pay all valid claims belongs exclusively to the principal. 

In practice, the surety will extend credit to the principal for the purpose of paying a claim the surety has verified as valid. The surety pays the claimant directly, which creates a debt that the principal must repay, typically by making scheduled installment payments. The surety can take legal action to recover the claim amount if the principal doesn’t repay the debt as agreed.

Multiplying the required bond amount (set by the obligee) by the premium rate (assigned by the surety) gives you the annual premium for a Florida performance and payment bond. The surety determines the appropriate premium rate through an underwriting risk assessment. The greatest risk is not being repaid for claims paid on the principal’s behalf. 

The key factor in determining the premium rate is the principal’s personal credit score. A high credit score is a good sign of low risk, which means a low-interest rate is appropriate. However, a low credit score means greater risk and warrants a higher premium rate.

The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

 

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Request a quote online or call today to speak with one of our surety bond experts about obtaining a Florida performance and payment bond.