CONTRACT BONDS: When any government or large company hires a contractor, they will usually require that the contractor secure a bond. The bond is the contractor’s guarantee to the obligee that he will perform as promised. If the contractor (the principal) should fail to perform, the surety company will pay out damages to the obligee. The surety company will then recover the amount of the claim from the contractor plus costs.
BID BOND: A bid bond may be required of a contractor in order to submit a bid for a project. The bid bond protects the obligee in the event that the winning contractor is unable to take the job after securing the bid reimburses them the difference between the principal’s bid and the next lowest bidder.
If the contractor has the winning bid, the bid bond will convert into a Performance Bond which guarantees that the job will be completed.
- Construction Bid Bonds – Financial Security for Contract Bidding.
- Maintenance Bonds – Provides protection for a lengthier period of time.
- Performance Bonds – Guarantee of work being completed.
- Labour And Material Bonds – Helps cover Labour and Materials Cost.
- Surety’s Consent or Agreement to Bond – Agreement with the Bond Issuer.
- Fiduciary Bonds – Similar to Insurance (Protects your business)
- License Bonds – Government bodies generally require you to obtain this type of bond.