Surety Bonds Built for Your Business

The type of surety bond your construction business needs depends on the unique opportunities and challenges it faces. Whether you are looking for a comprehensive bond program or a single bond for a specific bid, performance or payment, a specialized bond agent can work by your side to ensure you fully understand your options and the requirements for each. Generally speaking, a construction project will require a mix of bid, performance and payment bonds.

Five Common Surety Bonds for Construction

Bid bonds guarantee that you will actually accept the job upon winning the bid. Federal law requires this bond for all contractors bidding on projects valued at $100,000 or more.

Performance bonds or contract bonds are a little more complex. They affirm that you, the contractor, will complete the project and abide by applicable laws as well as specific “industry standards.” However, if these standards are not clearly defined, they can potentially open you up to breach of contract—that’s why it’s so critical to work with a surety bond provider who truly understands your industry.

Payment bonds affirm that you will pay your workers (including subcontractors and suppliers) in accordance with the agreed-upon contract terms.

Warranty bonds or maintenance bonds are essentially bonds that guarantee post project completion that the workmanship is of standard quality and protects against defective materials. If the project is found to be defective following completion, the bond amount can be used to pay for needed repairs. These bonds typically last one to two years.

Contractor license bonds are not tied to any specific type of project; rather, these bonds guarantee that you will conduct business in a “lawful and ethical manner” compliant with industry standards. For example, some states require all contractors to be licensed at the state level while others require licensing by certain municipalities. Because of these variances, it’s very important to partner with a surety bond provider who understands your business, including the types of project you pursue and the regions in which you operate.