Contractors may need to be bonded – What does that mean?
What is a Contractor Bond?
Simply put, a surety bond is a third-party guaranty. Bonds can guaranty many different things. Bonds are often needed for public construction jobs, a contractor license bond may be required to get your license based on your geographic location.
A license bond guarantees that a contractor will follow local licensing laws and building codes.
A permit bond guarantees that a contractor will complete a job that they pull a permit for.
Contractor Bonding for Jobs
Contract bonds are required if you want to perform work on public projects (and some private as well) to ensure jobs will be completed properly. They can be required by the owner themselves or a general contractor that hired you as a sub-contractor.
Is the first step in a contract bond. Allows you to bid on bonded jobs. These are available for no cost or a small fee.
This lets you perform work on a project once you are awarded the job.
A payment bond ensures that you’ll pay all laborers, sub-contractors and suppliers.
A maintenance bond allows you to work on a job that requires a warranty on your workmanship.
A supply bond allows you to work on projects that require you to deliver materials.
Contractor Bid Bonds:
A type of contract surety bond that ensures a bidder for a supply or construction contract will enter into the contract within the stipulated timeframe if the company wins the bid. Default results in the obligee (a government agency, in this case) receiving the difference between the amount of the principal’s bid and the bid of the next low bidder or company who qualifies for the contract, or the amount of the bond.
A type of surety bond that can be required by state and local regulators in a wide variety of situations to protect consumers or other parties to the contract. Some of the most significant for government policymakers include: license and permit bonds, reclamation bonds, mortgage broker bonds and subdivision bonds.
Surety bonds that involve construction projects. In the event a contractor defaults, contract surety bonds ensure funds are available to complete the contract and pay subcontractors, suppliers and laborers.
A fidelity bond is for a business seeks to protect itself in the event of a loss incurred because of employee dishonesty or misconduct. Some states require these bonds for businesses, such as construction companies, that do business with consumers so there is a guaranty that if the company dissolves the surety bond company will pay out to complete the project.
License and Permit Bonds:
Statutes and regulations require these bonds if a company seeks to obtain a license or permit in a state or local jurisdiction. If a principal violates its obligations, this bond pays the obligee or other third party.
Other types of Surety Bonds available on request.