Construction Bonds
Our surety specialists can assist with your performance and payment bonds for the construction industry as well as security contracts, janitorial, and information technology projects.
Performance and Payment Bonds
AssuredPartners has the expertise to place almost any size bond. In addition to performance bonds for construction contracts, we have expertise in placing performance and payment surety bonds for service contracts like security contracts, janitorial, and even Information Technology projects.
What is a Performance Bond?
A performance bond is a type of surety bond that provides a guarantee to the obligee (the entity or person being protected by the bond) that the principal (the contractor applying for the bond) will complete the project in accordance with the terms and conditions of the agreement. In the event that the contractor fails to adhere to the project terms specified in the construction agreement, the surety company steps in to either complete the contract itself or arrange for another contractor to finish the job. The surety company will compensate the new contractor for the required amount to complete the work, less the unpaid sum under the original contract, up to the penal sum or limit of liability stated in the bond. Should the surety suffer a financial loss, it seeks restitution from the contractor. Unlike insurance, a performance bond involves a three-party agreement designed to protect the obligee's interests.
What is a Payment Bond?
A payment bond is a type of surety bond that provides a guarantee to the obligee that the principal (the contractor) will pay its subcontractors and material suppliers on the bonded project. If the contractor fails to make these payments, the surety will cover the payments up to the penal sum of the payment bond. In essence, a payment bond ensures a lien-free project. Typically, a payment bond is issued in conjunction with a performance bond and is included in the overall price for performance and payment bonds.
What is a Bid Bond?
A bid bond is often required when bidding on a public works project. Federally funded projects generally require a bid bond amounting to 20% of the bid, though other public works projects may require bond amounts varying from 5% to 20%.
The bid bond primarily guarantees that the contractor will enter into the contract and provide the necessary performance and payment bonds. If the contractor does not win the bid, the surety company does not have to pay out the bond. Essentially, the bid bond promises that the successful bidder will fulfill the contract terms and obtain the requisite performance and payment bonds.
Surety Blog
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