Types of Surety Bonds Under the Construction Industry
August 29th, 2010 by bnnicholson
If you are thinking of entering the construction industry, there are a lot of things you need to keep track with. For instance, aside from licenses and permit to operate, you also have to learn about surety bonds related to the construction industry.
Unlike other businesses like mortgage brokerage where they get only one type of surety bond, in this case the mortgage broker bond, a construction business must submit various bonds before bidding and before the project starts.
The following are the surety bonds you need to get when engaged in the construction business:
1. Bid bond. This is to be submitted together with your bid. This states that you will adhere to what you proposed in the bid and you will sign a contract with the project owner if you win the bidding process.
2. Performance bond. This is submitted when the contract is signed. It states that you will perform and adhere with the specifications in the contract.
3. Payment bond. This is submitted together with the performance bond. This assures the obligee that whoever you hire in order to complete the project shall appropriately be paid by you.
4. Maintenance bond. This states that after the project is completed, the project itself will prove to be reliable and correctly done. This is for a specific period only after completion. For instance, if there are some parts of the project that is ruined because of improper construction, the surety company will either pay for the damages or have the part fixed.