Service Overview
Contract bonds are used in the construction industry by general contractors as part of construction law. They are a guarantee from a Surety to a project owner (Obligee) that a general contractor (Principal) will adhere to the provisions of a contract.
What Is Included In Contract Bonds
- Bid Bonds: Guarantee that a contractor will enter into a contract if awarded the bid.
- Performance Bonds: Guarantee that the contractor will perform the work specified by the contract.
- Payment Bonds: Guarantee that the contractor will pay for labor and materials, including subcontractors and suppliers.
- Maintenance Bonds: Guarantee that the contractor will provide facility repair and upkeep for a specified period.
- Supply Bonds: Guarantee the supply of goods and services.
Contractor Bonds, Bid, Payment, and Performance Bonds
At A Better Surety, no job is too big or too small. We work to get you set up with the market that is right for you, at the best available rate. We know time is money, so we work hard to place your bond as quickly as possible.
Bid Bonds
Bid bonds are submitted by a contractor along with a bid for a specific project. They are normally 5% to 20% of the total bid, with 10% being the most common. A bid bond gives the project owner financial assurance that if the contractor is awarded the project, they will enter into the contract and provide the required Performance and Payment bonds.
Performance Bonds
A performance bond is submitted by the contractor to the project owner (Obligee) once the job is awarded. It guarantees satisfactory completion of the project. The surety company backs this guarantee up to the bond amount, usually 100% of the contract price (and sometimes 50%). Premiums are based on the contractor’s credit and financial history.
Payment Bonds
A payment bond is also submitted once the contractor is awarded the project. It guarantees that the contractor will pay qualifying bills for labor and materials, including subcontractors and suppliers associated with the contract. The surety backs this guarantee up to the bond amount, often 50% or 100% of the contract amount. In many cases, the payment bond premium is included with the performance bond premium.