What Are Performance Bonds and Why Do Texas Contractors Need Them?

In the world of construction and contracting, trust and reliability are everything. Clients want to know that a project will be completed as promised—and that’s where performance bonds come in. Whether you’re a general contractor, subcontractor, or project owner in Texas, understanding performance bonds is key to winning bids and building your reputation.

At MAKZ Insurance Agency LLC, we help Texas businesses secure the right surety bonds to keep projects moving forward. Here’s what you need to know about performance bonds:

What Is a Performance Bond?

A performance bond is a type of surety bond that guarantees a contractor will fulfill their obligations under a contract. If the contractor fails to complete the project as agreed, the bond provides financial protection to the project owner, covering losses or the cost to hire another contractor.

Key Players:

• Principal: The contractor or business purchasing the bond

• Obligee: The project owner or client requiring the bond

• Surety: The insurance company or surety provider that issues the bond

Why Are Performance Bonds Important?

• Builds Trust: Shows clients you’re serious and financially stable enough to back your work

• Required for Public Projects: Government and many private contracts in Texas require performance bonds as part of the bidding process

• Protects Project Owners: Ensures the job gets done, even if the original contractor can’t deliver

What Does a Performance Bond Cover?

• Non-completion of Work: If the contractor doesn’t finish the project, the surety covers the cost to complete the job, up to the bond amount

• Defective or Substandard Work: If the completed work doesn’t meet contract standards, the surety may pay for repairs or corrections

• Financial Losses: Protects the project owner from additional costs due to contractor failure

Who Needs a Performance Bond in Texas?

You may need a performance bond if you are:

• Bidding on public construction projects (city, county, state, or federal)

• Working on large-scale private developments

• Required by a project owner as part of the contract terms

Common industries include general construction, roadwork, utilities, and specialty contracting.

How Do You Get a Performance Bond?

1. Contact a Licensed Agent: Work with an insurance agency experienced in surety bonds.

2. Provide Project Details: Share contract value, project scope, and your business’s financials.

3. Get a Quote: The surety company will assess your eligibility and offer a bond rate based on your credit, experience, and project size.

Why Choose MAKZ Insurance Agency LLC?

• Local Expertise: We understand Texas construction laws and bonding requirements.

• Access to Top Surety Providers: We work with leading insurance and surety companies.

• Personalized Service: Speak directly with a licensed agent for fast, tailored solutions.

Need a performance bond for your next Texas project?

Call us at 281-912-3338 or request a quote online.