Surety Bonds are a necessity in the field of public construction. Construction is a risky business and before being bonded on a particular construction project, contractors must undergo a financial and operational review. A judgment is made on whether the contractor is capable of carrying out the obligation as it becomes the responsibility of the Surety Company to complete the project or have it completed in the case of failure by the Principal.
There are different types of construction bonds required for contractors. For the purpose of sub-contracting, private entities and general contractors also need construction bonds from a Surety Company.
Bid Bonds: Guarantees the bids of contractors on bonded jobs.
Performance Bond: Ensures the performance of the Principal through the successful completion of a project.
Payment Bonds: Guarantees all sub-contractors, workers, and laborers involved in the construction project will be paid.
Supply Bonds: Suppliers are required to deliver material as stated in the bond.
Maintenance Bond: Are a warranty for the work after its completion.