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Are required by many Project owners (Federal, State, Local and Private) and General Contractors as assurance that a contractor (or subcontractor) is qualified to perform a certain job. The bid bond is a financial guarantee that if the contactor is awarded the job, they will enter into a formal contract, and provide the required performance and payment bonds.
Performance Bonds guarantee a contractor’s performance obligations to meet all terms, specifications and conditions of a construction contract.
Payment Bonds aka the Labor & Material Payment Bond protects certain labourers, material suppliers, and subcontractors against non-payment. This bond is significant for contractors who do public work. Since mechanic’s liens cannot be placed against public property, the payment bond may be the only protection these claimants have if they are not paid for the goods and services they provide to the project.
The U.S. Small Business Administration’s (SBA) Surety Bond Guarantee program can guarantee bid, performance and payment bonds for individual contracts up to $10 Million. The SBA Bond Program benefits small and emerging contractors who have the knowledge and skills necessary for success but lack the combination of experience and financial strength to obtain surety bonds through the standard surety markets.
Development / Subdivision Bonds typically guarantee to a city or country that a real estate developer, builder or land owner will finance and construct public improvements such as streets, sidewalks, gutters, drainage systems, and lanscaping, etc. The specific guarantees from subdivision bonds can vary depending on the requirements of each local municipality.
Supply Bonds guarantee that a supplier will provide the supplies/products/materials required in the contract. True supply-only contracts are normally considered “off the shelf” type of items that don’t require customization or fabrication after being manufactured. However, supply contracts can include fabrication requirements as part of the supplied end-product. Supply contracts can range from pencils to structure steel, school buses, pipe, computers, etc.
Maintenance Bonds are usually part of the performance and payments bonds, wherein a one year guarantee is implied. Separate maintenance bonds are often required if the maintenance guarantee in the contract exceeds one year. These bonds are a limited guarantee against defective materials or workmanship. If the contract language is not clear on the meaning of maintenance, it might be constructed to mean it covers normal wear and tear, which is not the contractor or surety’s intent. A clear understanding is needed to avoid a dispute towards the end of the maintenance warranty.
Surety Support Services, provides surety solutions for your clients. As a surety only agency, we spend our time on bonds, giving you more time to do what you do best, insurance.