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WHAT IS A PERFORMANCE BOND?

A performance bond is a promise from a surety company that says: “If the contractor doesn’t finish the job or doesn’t follow the rules, we’ll pay to fix it or get it done.” Cities and utility companies require bonds to protect public property, safety, and project completion.

DIFFERENT STAGES OF CONSTRUCTION & WHAT BOND MAY BE REQUIRED

Here are the main types of work in a new construction project, what each bond covers, estimated cost, and whether it’s typically required in California cities.

Work Type	Topics Covered	Bond Type Required	Approximate Cost (Bond Premium)	Required by City?
Demolition	Tearing down existing structures	Demolition Bond	1–3% of demo cost	✅ Yes (usually)
Grading	Leveling, compacting, preparing soil for construction	Grading Bond	1–3% of grading contract	✅ Yes
Excavation	Digging for foundations, pipes, utility trenches	Excavation Bond	1–3%	✅ Yes
Water Lines	Installing pipes that connect to city water system	Performance Bond	1–3%	✅ Yes
Sewer Lines	Installing waste drainage, connecting to public sewer	Sewer Bond / Performance	1–3%	✅ Yes
Gas Lines	Connecting to natural gas lines (e.g., SoCalGas)	Utility Bond	1–3%	✅ Usually
Electrical Lines	Wiring and underground/overhead electric service	Electrical/Utility Bond	1–3%	✅ Yes (LADWP etc.)
Power Lines	Installing high-voltage or transformer equipment	Utility Bond	1–3%	✅ Yes
Utility Lines	General term (combo of electric, gas, water, sewer, telecom)	Utility/Improvement Bond	1–3%	✅ Yes
Street Work	Curb, gutter, sidewalk, paving, storm drain	Street Improvement Bond	1–3%	✅ Yes

HOW MUCH DOES EACH BOND COST?

The bond amount is usually based on the cost of the work (called the contract amount). You pay a bond premium, usually 1% to 3% of that amount.

Here’s an example if each scope costs $100,000:

Scope of Work	Bond Amount Needed	Estimated Bond Cost (1%–3%)
Demolition	$100,000	$1,000 – $3,000
Grading	$100,000	$1,000 – $3,000
Excavation	$100,000	$1,000 – $3,000
Water Lines	$100,000	$1,000 – $3,000
Sewer Lines	$100,000	$1,000 – $3,000
Gas Lines	$100,000	$1,000 – $3,000
Electrical Lines	$100,000	$1,000 – $3,000
Power Lines	$100,000	$1,000 – $3,000
Street Work	$150,000	$1,500 – $4,500

Surety Bonds Services
Shawn Rabban
310 -714 -5616
Insurance License: 0613659

Appeal Bond
Probate Bond
Performance Bond
Subdivision Bond

WHAT DO CALIFORNIA CITIES REQUIRE?

Every city is a little different, but here’s what’s common across most:

Cities (like Los Angeles, Long Beach, Anaheim, etc.) usually require:

Performance Bond: To guarantee the work will be completed
Labor & Materials Bond: To protect workers and suppliers
Street Improvement Bond: For anything involving sidewalks, curbs, road cuts
Excavation/Grading Bond: If you disturb soil or change ground levels
Utility Bonds: For work connecting to city-owned systems (water, sewer, power)

You often need to:

WHO PAYS FOR THE BOND?

QUICK CHECKLIST: DO YOU NEED A BOND?

Ask yourself:

Are you working on public property (street, sidewalk, utilities)?
Are you getting permits from the city?
Are you connecting to city utilities like gas, electricity, water, and sewer?
Are you grading or demolishing?

If yes to any of these — you probably need a bond.

Let me know your project type, and I can help you:

Figure out exactly which bonds are needed for your city
Estimate total bond costs
Or connect
with a bond agent if needed

Want me to build a custom bond checklist by city for you? Just tell me the city’s name.

Insurance License: 0613659 DRE 00667328 | NMLS 298861 | 729817 Notary number 2424124.
Shawn Rabban –Bond & Insurance Broker 310 -714 -5616