Other Commercial
Service Contract Bond
A service contract bond guarantees performance of a recurring service contract, such as janitorial, lawn care, or waste services, usually written for one year and renewed each year.
- Required by
- Public agencies and some private owners letting multiyear service contracts
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The bond promises the owner (often a public agency) that the contractor will perform the service contract for the bond term. If the contractor defaults, the surety must remedy the default or pay the owner's added cost, up to the penal sum. Under an annually renewable bond, the surety's decision not to renew is usually not itself a default.
Who needs it
- Janitorial and custodial contractors
- Landscaping and lawn maintenance contractors
- Waste, security, and other service contractors on public contracts
What the underwriter looks at
- Annual contract value
- Contractor's financial statements
- Experience with similar contracts
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
Why are these bonds written one year at a time?
Sureties prefer annual terms on multiyear service contracts because they cannot underwrite years of future service at once. Some owners reject one-year renewable bonds, so read the bid documents before you bid.
What happens if the surety does not renew?
Under typical annual renewable forms, the surety must give advance notice, and non-renewal is not a default by the contractor. You would then need a replacement bond.