Date Published: October 19, 2023

There are many Benefits and drawbacks of bonding subcontractors. If you are a general contractor, picking the right subcontractors is paramount to your success. One way to reduce risk and assist in prequalifying subcontractors is to require subs to post performance and payment bonds.
Benefits of bonding subcontractors for a general contractor:
  • Reduced risk: A surety bond is a financial guarantee that the subcontractor will complete the work as agreed upon and pay their suppliers and subcontractors. This reduces the risk to the general contractor in case the subcontractor defaults.
  • Improved financial stability: Subcontractors that are bonded are more likely to be financially stable, as they have been underwritten by a surety company. This means that they are less likely to default on theirBenefits and drawbacks of bonding subcontractors contracts, which can save the general contractor time and money.
  • Enhanced reputation: A general contractor that bonds its subcontractors is seen as being more professional and reliable. This can make it easier to win new contracts and attract qualified subcontractors.
  • Maybe Required for public projects: Many public projects require subcontractors to be bonded. By bonding its subcontractors, a general contractor can be eligible to bid on a wider range of projects.
  • Sureties provide an added level of prequalification.  The surety underwriting process is based on prequalification

Drawbacks of bonding subcontractors for a general contractor:

  • Cost: The cost of a surety bond is typically borne by the subcontractor. However, the sub contractor is likely passing that cost on the the GC. .
  • Administrative burden: Obtaining and managing surety bonds can be time-consuming and administratively burdensome.
  • False sense of security: A surety bond is not a guarantee that the subcontractor will perform well on the job. The general contractor should still carefully vet subcontractors before hiring them.

Overall, the benefits of bonding subcontractors outweigh the drawbacks for most general contractors. However, it is important to carefully weigh the pros and cons before making a decision.

Here are some additional things to consider:

  • The size and complexity of the project: The larger and more complex the project, the more important it is to bond subcontractors.
  • The financial stability of the subcontractors: If you have any concerns about the financial stability of a subcontractor, it is a good idea to require them to be bonded.
  • The requirements of the project owner: Some project owners may require subcontractors to be bonded.

If you do decide to bond your subcontractors, be sure to work with a reputable surety company. You should also carefully review the terms and conditions of the bond before signing it.

Performance and Payment Bond Underwriting Blogs. is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, is the premier provider of surety bonds for the construction industry, nationwide, since 2003.

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