Massachusetts contractors
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A surety bond is not insurance for the contractor. It is a three-party guarantee in which a surety company promises the project owner that the contractor will perform the contract — and if the contractor does not, the surety pays the owner and then seeks reimbursement from the contractor.
That single distinction explains everything about how bonds are underwritten: the surety expects never to lose a dollar, so it is deciding whether to lend you its credit, not whether to insure your risk.
| Bond | What it guarantees | When it's needed | Typical amount |
|---|---|---|---|
| Bid bond | That if you win, you will enter the contract and produce the performance and payment bonds | Submitted with the bid | Set by the bid documents — 5% is the usual figure on Massachusetts public work |
| Performance bond | That you will complete the work per the contract | At contract award, before you start | Set by the governing statute or the bid documents — see below |
| Payment bond | That your subcontractors and suppliers get paid | Issued alongside the performance bond | Set by the governing statute or the bid documents — see below |
Public construction work in Massachusetts generally requires bonding by statute, and the specific requirement depends on which regime governs your project. M.G.L. c. 149, § 29 requires payment-bond security on public contracts over $25,000, in an amount not less than half the total contract price. On public building work under c. 149 §§ 44A–44J, § 44E requires performance and payment bonds each in the sum of the contract price. Bid deposits on public work generally run 5% of the bid (c. 30 § 39M for public works, c. 149 § 44B for buildings). Federal construction contracts require performance and payment bonds under the Miller Act — the statute sets the threshold at $100,000 (40 U.S.C. § 3131), which the Federal Acquisition Regulation implements with full bonding above $150,000. Private owners and general contractors also require bonds by contract whenever they want the protection, so "it's a private job" does not mean no bond. Read the bid documents; they will tell you which regime applies.
Sureties talk about the three Cs. Knowing what they are tells you what to prepare.
On top of the three Cs, expect the surety to want personal indemnity. A general indemnity agreement signed by the owners is standard on contract surety — it means that if the surety pays a loss, it can recover from you personally. That is not a hostile term; it is the reason bond rates are a fraction of what an insurance policy for the same exposure would cost. Sureties sometimes ask about spousal indemnity as well. Prevent does not collect that request or pass it along — whether a spouse's signature may be required at all is governed by federal credit rules, and it is a question for the surety and your attorney, not something we will help gather.
Being turned down once does not mean you are unbondable. It usually means the submission was thin, the job was too big a jump from your completed work, or the file went to the wrong market — all three are fixable, and the fix is usually a better-organized submission and a smaller first bond rather than a different contractor. Approval is the surety's decision, not ours, and Prevent does not guarantee it.
Bid dates do not move. That is why our bond request form asks for your deadline on the very first screen, before anything else — a request with a bid date inside five business days is flagged the moment you save it, even if you never finish the form, so we can start working while you are still gathering documents.
What we need first, in this order:
With all of that in hand, a small credit-based bond can move on a short clock. A fully underwritten bond on a large contract cannot move faster than the CPA statement, the work-in-progress schedule, and the references arrive — that is a document-gathering constraint, not an effort one, and it is worth knowing before your bid date rather than after.
Worth saying plainly, because contractors are asked for it constantly. Our bond request form collects no Social Security numbers and no dates of birth. Credit authorizations for individual owners are separate instruments that name the surety — not Prevent — as the party pulling the report, and we do not collect them through the website. Your federal employer identification number is stored masked to its last four digits. Spousal-indemnity questions are not asked, and are discarded if they ever arrive.
The surety is going to ask about your insurance anyway, because a contractor who is underinsured is a contractor more likely to have a loss that becomes the surety's problem. If you are getting bonded, it is the right moment to look at the whole account — general liability, workers' compensation, commercial auto, tools and equipment, and the certificate wording your general contractors require.
A surety bond is a three-party guarantee among you, the project owner, and a surety company. The surety guarantees the owner that you will perform. It is not insurance for you — if the surety pays a claim, it seeks reimbursement from you under the indemnity agreement you signed.
A bid bond guarantees that if you win you will sign the contract and furnish the required bonds. A performance bond guarantees you will complete the work per the contract. A payment bond guarantees your subcontractors and suppliers are paid. Performance and payment bonds are typically issued together at award.
Contract surety is not priced like insurance. The premium is a rate applied to the contract amount, quoted as a rate per thousand dollars of contract value, on a sliding scale — the rate falls as the contract gets larger, so a $2,000,000 bond does not cost ten times a $200,000 bond. The rate you are offered depends on the surety, the bond size, the class of work, and the strength of your financial statement and track record, and standard-market and substandard-market rates are not close to each other. One figure is fixed and public: on a bond backed by the U.S. Small Business Administration's Surety Bond Guarantee Program, the SBA charges the small business a guarantee fee of 0.6% of the contract price on performance and payment bonds, and no fee on bid bond guarantees. Everything above that is a quote, and we will give you the actual rate once we have the project and the market.
Sometimes, but it narrows the market and it costs more. Weak owner credit usually rules out fast credit-based programs and pushes the file to a fully underwritten submission or to the SBA Surety Bond Guarantee Program, where the government guarantee changes the surety's answer on files that would otherwise be declined. Nothing is guaranteed.
Start smaller than you want to. Get one modest bond issued cleanly, complete that job, and you have created the track record the next surety will underwrite. Have your entity documents, your most recent financial statement, and a list of completed jobs ready — an organized first submission is worth more than most contractors expect.
On contract surety, almost always. A general indemnity agreement signed by the owners is standard, and it is the reason bond rates are a small fraction of the contract value. Read it, and have your attorney read it, before you sign — it is a real obligation.
Yes, generally. M.G.L. c. 149, § 29 requires payment-bond security on Massachusetts public contracts over $25,000, in an amount not less than half the total contract price; on public building work under c. 149 §§ 44A–44J, § 44E requires performance and payment bonds each in the sum of the contract price. Federal construction contracts require performance and payment bonds under the Miller Act, with the statutory threshold at $100,000 and full bonding implemented by the FAR above $150,000. The requirement that governs your project is written in its bid documents.
It depends which route your file takes, and the routes have very different clocks. A small credit-based bond, where the surety underwrites the owner's credit instead of audited financials, can be turned around on a complete application with no CPA statement — that is the fast route. A fully underwritten bond needs a CPA-prepared financial statement, a work-in-progress schedule, and references, and cannot move faster than those documents arrive. We will not quote a number of hours before we have seen the bond requirement, because the surety issues the bond, not us. What we will do is tell you on the first call whether your bid date is achievable on the credit-based route. Our request form asks for the bid date on the first screen and flags anything inside five business days the moment you save it, even if you never finish the form.
The request takes a few minutes, saves as you go, and can be finished later from a link we email you. If your deadline is close, completing the first screen alone is enough for us to start.
This page is general information for Massachusetts contractors. It is not legal, tax, or accounting advice, not a quote, and not a commitment to issue any bond. Bond approval, terms, rate, and capacity are decided by the surety company through its own underwriting, and acceptance is never guaranteed. Statutory and contractual bonding requirements vary by project and change over time — the requirement that governs your job is the one written in its bid documents.