What Are Surety Bonds, and When Might You Need One

STEP 1

STEP 2

• Bid Bond: Bid bonds ensure the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract.
• Payment Bond: Payment bonds ensure suppliers and subcontractors are paid for work performed under the contract.
• Performance Bond: Performance bonds ensure the contract will be completed in accordance with the terms and conditions of the contract.
• Supply Bond: Supply bonds mandate that suppliers provide materials, equipment and/or supplies as defined in purchase orders. If the supplier fails to provide the supplies as agreed, the bond amount can be used to reimburse the purchaser for the resulting loss.
• Maintenance Bond: Maintenance bonds guarantee against defective materials and workmanship for a specific time period following a project’s completion. If the project is found to be defective during this time, the bond amount can be used to pay for repairs that need to be made as a result.
• Subdivision Bond: Subdivision bonds require contractors to build and/or renovate public structures within subdivisions – such as streets, sidewalks and waste management systems – according to local specifications. If a contractor fails to do so, the bond amount can be used to complete the subdivision project appropriately.

STEP 3