Contract Surety Bonds
Who Are Contract Surety Bonds Right For?
- General contractors and construction managers
- Prime subcontractor trades, mechanical and electrical
- Road and bridge builders
- Paving contractors
- Utility, water and sewer line contractors
Types of Contract Surety Bonds
Contract surety bonds are bonds that the government or an owner of a construction project may require a contractor to obtain. They are designed to ensure that the contractor is qualified to perform the necessary work, will complete the project in a timely manner and will pay the subcontractors, suppliers and laborers that are necessary to complete the project. If the contractor cannot fulfill these guarantees, the company issuing the contract surety bond must find another contractor to complete the contracted project or compensate the construction project owner for their financial loss.
Federal construction projects valued at $150,000 or more require contract surety bonds, and most state and municipal governments have similar stipulations. Many private owners embarking on construction projects also require these bonds for their contractors. They are also sometimes required by lenders and by general contractors of the subcontractors they bring on for the project. There are various types of contract surety bonds.
Frequently Asked Questions