Provide financial protection in the event that a particular job is not performed as desired. If a contractor walks off a job or fails to complete it, the bond would pay all legal obligations. A contractor’s bond covers obligations to unpaid suppliers or subcontractors and damage to the property caused by the construction. In those situations, two bonds are required; a Performance Bond and a Payment Bond. How you bond will depend on your company’s financial strength, job size and frequency of bonded projects.
Are often required when submitting a bid for public and private construction projects. The Bid Bond guarantees that the winning bidder will be able to perform the work and encourages the bidder to submit a valid bid. If the bidder is not able to honor their bid, the surety company would pay the required penalty (generally 5 to 10% of the bid) and in turn seek repayment from the contractor. In order to obtain a bid bond, the contractor generally must be eligible to obtain the payment/performance bond for the project value.
Are often required by a purchaser, assuring that the seller will supply a product as required by a contract, often for a guaranteed price or within a guaranteed time frame. If the seller defaults, the bond will provide compensation and in turn collect from the bonded party.
Are payment & performance bonds for small bids up to $350,000. As the name implies, rapids bonds save time and can generally be approved within 24 hours. Financial statements are not required however a credit check and signed indemnity agreement are necessary.