It is important to understand the purpose of a contract surety bond because it becomes easier to comprehend the connection to contract terms and conditions. A performance bond is a guarantee that the construction contractor will complete the project to the specifications outlined in the contract. The performance bond does not state the conditions on which a claim can be made on the bond that verbiage is in the contract itself. Therefore, it is critical for underwriters to read through the contracts to determine what the obligations are because that is what claims will be made on. The exact level of risk for the surety company is determined by reviewing contract terms, the amount of perceived risk factors into the premium rate charged. The higher the risk and exposure of the surety company then the premium rate will increase and vice versa. Key terms the surety underwriters are looking for are: