Contractor Bonds

Contractor bonds include a multi-tiered group of individual bonds. These consist of bid bonds, performance bonds, maintenance bonds, and supply bonds. To fully understand what goes into contract based bonds, it's important to understand each aspect of these various bond types. Let's take a look at them in more detail.

The Anatomy of Contractor Bonds

Let's start with the first part of any contractor bonds process, the bid bonds. These ensure that the contractor making a bid on a project is qualified to do such work, and that they will meet the obligations of the bid.

Next in the contractor bonds process is performance bonds. These protect the person paying to have work done from financial loss due to a company's failure to perform its contractual obligations. Such failure can be due to a company's inability to deal with cash flow issues, labor problems, or going out of business.

Maintenance and Supply

Maintenance bonds are like a kind of warranty. This ensures that a company will stand behind their work for a certain pre-determined period of time to make any repairs or alterations that may be necessary, for whatever reasons. Finally, supply bonds are meant to ensure that all materials needed for a project are properly paid for by the company doing the job, and that nothing will cost more than originally estimated. Surety companies provide all of these bonds to protect an individual from unnecessary financial liabilities.