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Performance and Liability Bond

Discussion in 'Business Operations' started by QC Lawn Services, Aug 4, 2004.

  1. QC Lawn Services

    QC Lawn Services LawnSite Member
    Messages: 63

    We are bidding on a community association and they are asking for a Performance and Liability bond. We are not exactly sure what this means and how much it will cost. I'm sure some of you have had to provide this to some of your clients. Thanks for the help.
  2. venecular

    venecular LawnSite Member
    from Atlanta
    Messages: 122

    Proof of insurance, they probley have a criteria (amount)
  3. Precision

    Precision LawnSite Silver Member
    Messages: 2,995

    I have a feeling performance and liability bond is like what some people demanded when I was in the catering business.

    essentially it is insurance against you not performing your job. If you got out of business or your mower dies or whatever they are compensated for having to get another LCO to take over.

    For us it was weddings. They wanted to know that if we failed to deliver on our $30k of wedding food and cake they were covered for double that to ease the pain and suffering or something.

    Call your insurance agent they should know for sure.
  4. MMLawn

    MMLawn LawnSite Gold Member
    Messages: 3,569

    It is a Surety Bond that some commerical props require and it what LCOs mean (use) when they say Licensed/Insuranced/BONDED. It is basically a "posted bond/source" that should you fail to do as outlined that they can collect directly from. This type of bond only runs around $100-$150 per $5K a year in most places (ours is for $5K and is a flat $100) and your local agent should be able to write it through a Surety Company after they run a credit check on you and your company. Ours is through Western Surety I believe.
  5. QC Lawn Services

    QC Lawn Services LawnSite Member
    Messages: 63

    Thanks for the help. I just wanted to be clear when I talked with my insurance agent.
  6. GrassBustersLawn

    GrassBustersLawn LawnSite Senior Member
    Messages: 981

    A PERFORMANCE BOND is a guarantee that they can get the work done IF YOU, for some reason fail to do it. (Go out of business, die, etc.) (If you don't do the work, the client will get a CASH settlement so they can go and hire another LCO to do the work. Alot of times these bonds are difficult to get (depending on $ amount needed). You need to show that you are responsible (have money) and have been in business for a long time (generally at least 3 years). One of these bonds is similar to going to a bank and taking out a loan. They will generally want a lot of info before deciding to issue one.

    Unless this is a BIG DOLLAR job. It probably won't be worth the hassle. Plus you will have to work the cost of the bond (& time you spend getting it) back into the price of the job!

  7. MMLawn

    MMLawn LawnSite Gold Member
    Messages: 3,569

    As long as you have been in business (and are fully State/City & County Licensed) for at least a couple years and have very good credit and no lawsuits or judgements it is easy to obtain and can be written the same day. You also will want to make sure they are not asking for a separate Bond made payable to them instead of a General Bond on file with your County payable to "anyone" you do work for. If so it would still be no problem but yes factor that cost in and I would also required a longer contract if possible.
  8. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    These guys are mostly right.......But try to get one.........You could get a mortgage on the White House with less paperwork, time and hassle.......I completely avoid bonded jobs.
  9. GarPA

    GarPA LawnSite Silver Member
    from PA
    Messages: 2,585

    as mentioned above, ....getting the bond can be a hassle even though the premium is relatively small. Frankly if they want a bond, I wont bid the job. Its just a paperwork hassle that I choose not to get into. I give them a long list of references, proof of insurance, etc. Its not like we're building a house or an office bldg where a performance bond is a must. If its a BIG and I mean BIG landscape/hardscape installation, asking for a bond is not unreasonable...but for routine grounds maintenance, imho its overkill

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