Performance Bonds

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What are Performance Bonds?

A Performance Bond Guarantees that a bonded contractor will perform the obligations under the contract according to the contract terms and conditions. Project owners will typically require performance bonds for either 50% of the contract value or 100% of the contract value. In some rare cases, they may require bonds for less than 50% of the construction value but this will generally occur for service-based contracts.

It is important to remember that a performance bond is not insurance. A performance bond is a three-party arrangement between you (the principal), the surety and the project owner (also called the Obligee). In essence, the surety company is agreeing to guarantee that your company will perform its contractual obligations to the project owner.

Types of Performance Bonds


  • CCDC Performance Bond

    A standard surety performance bond form provided by Canadian Construction Documents Committee guaranteeing performance of the contract by the Contractor.

  • Form 32 Performance Bond

    This is the new standard bond wording utilized in Ontario by all public entities for contracts over $500,000.

  • SAC Headstart Subcontractor Performance Bond

    A performance bond wording preferred by General Contractors when requesting performance bonds from subcontractors.

Who Needs Performance Bonds?

There are a variety of businesses that require performance bonds. The most common are construction companies which provide construction services to government entities. An example of this would be a general contractor building a school or an electrical contractor upgrading the lighting systems at a retirement home. However, there are several other industries including, technology, trucking and service that may be required to provide a performance bond to guarantee they perform the obligations of the contracts for which they enter into.

Industries that commonly require Performance Bonds:

  • Construction
    • General Contractors
    • Mechanical
    • Electrical Contractors
    • Sewer & Watermain Contractors
    • Road Paving Contractors
    • Heavy Civil Contractors
  • Service Based Contractors
    • Snow Removal Contractors
    • Tree Cutting Contractors
    • Landscape Contractors
    • Janitorial Contractors
  • Technology Providers

The requirement for Performance Bonds has increased significantly over the past few years as various provinces updated their Construction Acts. Ontario was the first to finalize this process and has made Performance Bonds mandatory on all publicly funded construction projects over $500,000 in value. This has had a ripple effect in the private sector with a number of consultants writing the requirement for bid bonds into their tender specifications.

FCA is Canada’s Performance Bond Expert Since 1919

FCA has been providing Canadian companies with surety bonds since 1919. We have set the industry standard for turnaround time for both new and existing clients. We pride ourselves in ensuring our clients never miss out on an opportunity.


Generally speaking a performance bond can cost anywhere from 0.5% to 1.5% of the awarded contract price inclusive of HST. Where the cost ultimately sits in this range depends on the amount of coverage the owner is requiring. Usually this is either 50% of the contract price or 100% of the contract price. The higher level of coverage requested the greater the cost. Warranty timelines will also impact the cost of a Performance Bond.

To determine pricing for a Contractor a surety company will evaluate the 3 C’s of Surety when looking at your application for a performance bond facility. These are character, capital and capacity. The more comfortable a surety company is with your business, its owners and the financial strength the lower the rate can go.

The amount of premium generated through your performance bond facility will also have an impact. Contractors who generate a lot of bond premium can expect lower rates than infrequent users of bonds.

Lastly, the duration of the contract can impact the cost. Rates are generally provided for a one-year period. If durations are in excess of 12 months then an additional premium may be charged. Surety companies may have special ratings for larger, long term projects so make sure you discuss with your surety broker to ensure you are receiving the best price.

Performance bonds are different from insurance in one critical way. With insurance, the insurance company provides your business with a policy, if your business experiences one of the perils in your insurance policy the insurance company will provide you with compensation.

With a performance bond the coverage is provided to the project owner (also called the Obligee). If the project owner makes a valid claim against your performance bond and the surety is forced to pay a claim, they will then look to your business to recover those losses.

Becoming a bonded contractor can be easy if you choose to work with the right broker. An experienced and knowledgeable surety broker will know the industry and understand your business. They will have a number of surety markets they work closely with and will be able to easily fit you with the right surety company for your business.

Documents commonly required to apply for Performance Bonds:

  • Financial Statements for your Company
  • A Contractor’s Questionnaire (to be provided by your FCA Advisor)
  • Personal Net Worth Statements for the owner(s)
  • A copy of your Banking Terms & Conditions Agreement for your Operating Line of Credit (if one is established)
  • A Professional Resume for Key Employees (or LinkedIn Profiles)

Surety companies will look at the character of the owners of the business. This includes their past experience, reputation and years in business. It can also include reference checks.

They also look at a contractor’s capacity. This includes their project management team, estimating and internal back office functions and whether these are adequate for the work they intend to target.

Lastly, they will look at a contractor’s capital. This often includes review of corporate financial statements and personal financial statements of the owners. A good surety broker will also be able to identify what items are important and what items are not as they look to understand your business. This will avoid you having to fill out multiple forms and applications un-necessarily.

Once all of the documentation has been provided, a surety facility can be approved and open within 24-48 hours.

At FCA Surety, we know that every company starts somewhere. If you are a new company or a smaller construction firm targeting jobs under $1,000,000 and have been told you don’t qualify for bonding, the FCA FirstBond™ for New and Emerging Contractors program might be perfect for you.

FirstBond™ is a quick and easy solution for new and emerging contractors across Canada who are looking to establish their first facility.

The program is an excellent opportunity for contractors to establish their first relationship with the surety, build a portfolio of bonded work and build their knowledge of how construction surety works.

When you establish your surety facility with your broker you will be provided a single job limit and an aggregate limit. An aggregate limit is the total cost to complete of all of your outstanding work at any given point in time. You will also be provided with your surety bond rates for any performance and labor and material payment bonds you require and will also be charged an annual surety fee.

Bonding Facility Example:

  • Single Contract Limit: $1,000,000
  • Aggregate Contract Limit: $5,000,000

It is important to note that these limits are guidelines but are never set in stone as contractors require flexibility with their limits to ensure they can properly service their clients and grow their business.

As a long-standing surety brokerage we have excellent working relationships with all of the surety companies currently operating in Canada. Our key partners include:

  • Intact
  • The Guarantee Company of Canada (GCNA)
  • Trisura Guarantee
  • Aviva
  • Travelers
  • Northbridge
  • Zurich
  • Western Surety
  • Economical
  • The Hartford

We know these companies well and understand their underwriting philosophies and principles. This is very important as no two sureties are alike. By understanding the appetites of each company, we are able to place our clients with the right surety partner. This ensures not only excellent terms but also a long-standing relationship that supports the growth and flexibility that our contactors demand.

Why Choose FCA Surety?

Ease of Doing Business

We set the industry standard for turnaround time for both new and existing clients, you can expect excellence.

Trusted by Surety Markets

Outstanding relationships with all of the most reputable surety bond markets in the industry, giving you the power of choice.

Surety is What We Do

Our industry-leading team boasts seven full time dedicated surety professionals with a combined 80+ years of experience.


Our organization has been working with FCA Surety Bonds and Insurance for over 2 years. The team, led by Jamie Collum and Warren Griffiths, exceeds expectation in service, responsiveness and construction knowledge. Our business needs often demand last minute bonding, and we have never been disappointed by FCA. Always going above and beyond to deliver the right solution in a seamless and effortless manner. We highly recommend FCA for all construction insurance needs.


After 6 years in business, our construction company was asked to provide bonding for 3 very important projects that were awarded to us. We had no idea where to start as bonding was something totally unknow to our organization. A quick search online, and let me say, we couldn’t have found a better company to assist us…. FCA! Andrew and his team were quick to explain the intricacies of bonding, all the requirements including processes. They took their time to clearly explain and educate us on all that is bonding. They were patient and they took the time to walk us through the necessary steps to get us started and set up. These days, it is rare to recieve this level of support. I highly recommend FCA!


FCA is one of the best companies we have had the pleasure of working with so far. Very professional, fast and always on time. Looking forward to continue working with them.


Get A Free Consultation Today!

It all starts with a conversation today with one of our surety bonding experts. Once we determine which type of surety bonds you require, we will work tirelessly to expedite these bonds for you.

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