- Also known as Construction Bonds and Contractor Bonds
- All types of contract bonds
- Exclusive rates nationwide
- 100% secure and easy online application
What is a contract bond?
A contract bond, also known as a contractor bond, is a type of surety bond which guarantees that a job will be completed in accordance with the conditions set forth in the contract for that job.
Contract bonds are usually obtained by construction contractors to guarantee that if a job is not completed or the contractor defaults, the owner of the project will be compensated. Because they are mostly used in the construction industry, these bonds could also be referred as construction bonds.
Such bonds are required on all federal projects above $100,000 and on many state projects. Some private projects also require contractors to obtain contract bonds.
Different bonds are required for the different stages that a construction project goes through. For example, bid bonds are needed at the initial stage when contractors participate in a bid. Bid bonds guarantee that contractors will commence work on the project if they are awarded a bid, and that they will enter at the bid amount. They usually also guarantee that the contractor will post a performance bond when they are awarded the contract.
Questions about Contract Bonds
Do I need a license to get a contract bond?
Yes, in order to obtain a contract bond, you need to be licensed as a contractor in the state that you are working in. In order to get licensed, you will also need to obtain a contractor license bond which you will need to renew along with your license every time it runs out.
What is a bonded contractor?
A bonded contractor is a contractor who is licensed and bonded as a contractor in the state that they are operating in, and who has obtained the relevant contractor bond or bonds for the project they are currently working on.
How can I become a bonded contractor?
Once you know what type of contract bond you need and you’ve fulfilled all contractor bonding requirements, you can go ahead and apply online. We will then contact you with a free quote on your bond.
How much does a contractor surety bond cost?
Contractor bond cost depends on the type of bond you need to obtain. Some bonds, like bid bonds, cost much less than most other bonds. The cost of your contractor bond will also depend on the amount that you need to get bonded for.
When determining your contractor surety bond rate your personal credit score will mostly be taken into account, especially for smaller bond amounts. Higher bond amounts usually require greater care and scrutiny on the side of the surety due to the higher risk involved.
You may therefore need to provide further financial documentation before your bond is underwritten. This includes personal and business financials, your cash on hand and even your industry experience.
Can I apply for a contract bond with bad credit?
There are no bad credit programs for contract bonds.
However, if you have slight credit issues, you may still qualify for a bond. If your personal and business financial records are well-kept and you have good industry experience, you may still be able to obtain a contract bond with less than perfect credit. Call us at (877)-514-5146 to consult with one of our surety bond experts.
Check the list below to find the type of bond you need.
Types of Contract Bonds
- Bid bonds are designed to guarantee that a contractor provides any other required performance bonds. This type of bond also assures the project owner that the contractor will fulfill the contract at the given bid price.
- Also referred to as contract bonds, construction bonds are often considered as a subcategory of performance bonds instead of a specific type of bond. In general, construction bonds protect the project owner in some form by ensuring the fulfillment of a contract.
- Sometimes called warranty bonds, maintenance bonds ensure that the contractor will provide quality materials and workmanship. This type of bond operates for a specified amount of time after a project’s completion, and it protects the owner of a project against defective work.
- A payment bond is used to ensure that all of a contractor’s obligations to suppliers, laborers and subcontractors will be fulfilled in the event that the contractor defaults.
- Performance bonds, which are a type of surety bond, are designed to guarantee that contractors complete a project or fulfill certain obligations. These bonds provide project owners with insurance in various forms against the failure of the contractor to fulfill certain duties. The most common types of performance bonds are supply bonds, site improvement bonds, payment bonds, maintenance bonds, construction bonds and bid bonds.
- Learn more about the difference between Payment and Performance Bonds, when do you need them and how they work together.
- A site improvement bond is often required by a government agency to protect public property from any losses associated with a private project. This type of bond guarantees that the developer associated with a particular project will completely restore any public property that is damaged or altered during the project.
- Subdivision bonds may be required by a local government in order to ensure that mandatory public improvements are made to their property. These bonds can be required of any developer, builder, or even a landowner to ensure that they meet the requirements of the local authority.
- This type of bond is used to guarantee that a supplier will provide certain materials or supplies. A supply bond protects the purchaser in a contract from loss in the event that a supplier does not fulfill any contractual obligations.