A contract bond guarantees that a job will be completed in accordance with the conditions set forth in the contract for that job. They are usually obtained by construction contractors to guarantee that if a job is not completed or the contract defaults, the owner of the project will be compensated.
There are 3 main types of contract bonds (often called construction bonds) in the surety industry:

Performance Bond: A guarantee from the contractor that they will complete the project in accordance with all terms of an agreed upon contract.

Payment Bond: Often required alongside a performance bond. This bond is a guarantee that the contractor will pay all subcontractors, suppliers, and laborers in a timely manner.

Maintenance Bond: A construction bond that guarantees the craftsmanship, upkeep, and protects the Obligee against defects after a project has been completed. If a maintenance bond is required, the obligation will typically be for one or two years upon completion of work (per the terms of the contract).

Contract bonds are underwritten on a project by project basis. The exact cost of your bond will be based off several factors:

  • Required bond amount
  • Approved Contract Terms
  • Contractor’s (the principal) experience & work history
  • Contractor’s credit score
  • Contractor’s financial statements (if requested)

AAA Surety, a family owned business, has a strong national presence in surety bonds for over 50 years.