Construction Bond

A construction bond is a type of surety bond used by investors to protect themselves against adverse events that may prevent or disrupt the completion of a project. The builder may fail to complete projects due to the inability to meet contract specifications or insolvency. Bonds are a necessary prerequisite for any project, as many things can go wrong in a massive construction project. It is of paramount importance that projects of particular sizes, like large government and public works projects, acquire bonds.

Bid Bond

A bid bond is a guarantee that assures the project owner you are capable of undertaking the job after selection in the bidding process. The project owner is more than comfortable to award the project based on the presence of a bid bond, knowing fully well that they will collect compensation from the construction bond. 

Performance Bond

A performance bond protects the owner of the involved contractor fails to perform, or protects the owner from losses emanating from poor performance, or is unable to deliver the work as obligated in the contract. Moreover, in other circumstances, the contractor may declare himself bankrupt, so the surety is responsible for compensating the owner for any loss incurred. 

Payment Bond

A payment bond is a three-way contract that brings together the owner, the involved contractor, and the surety firm into an agreement that all subcontractors, material suppliers, and laborers will be paid, making the project lien-free. This bond is rare, and it's billed at 50% of the regular premium. 

Maintenance Bond

Maintenance bonds provide a warranty after project completion in cases of defective materials, poor artistry, and, just like warranties, they're time-bound. If a project is found to be defective within the prescribed period, the owner receives the bond amount for repairs or replacement of defective parts.

Subdivision Bond

Subdivision bonds are acquired for new projects by some local governments when a contractor starts working on a subdivision of a building project. It ensures that the contractor will complete structures within the subdivisions, like electrical upgrades, sidewalk maintenance, drainage systems, and sewer systems, according to specifications and within the stated timeline. Failure on the part of a contractor triggers the bond payment to complete the remaining works. 

Site Improvement Bond

Site improvement bonds are acquired by contractors when undertaking improvements on a current site rather than on a new building. The bond will compensate victims of fraud on the part of the contractor. It shares similarities to a subdivision bond, but subdivision bonds are for new buildings. 

Contractor License Bond (CLB)

CLB or permit bonds are classified as construction surety bonds that serve the purpose of all parties involved in a construction project. This bond assists all parties involved in the case of an unethical business decision. It protects the many parties, including the owner/investors of a project and the bond-issuing firm. A contractor must purchase a contractor license bond to qualify for the contractor licenses at the city, county, and state levels. If one of the parties is affected by the wrong decisions, they can file against the bond for financial compensation. 

Supplier Bond

The supply bond guarantees the supplier will be able to meet their obligation of supplying materials as prescribed in the purchase orders. If a supplier reneges on the agreement, then the Bond is released to compensate the purchaser for the losses incurred. We can write all types of construction bonds. We do construction surety bonds fast in your state.

The Miller Act, passed by Congress in 1935, is legislation closely related to the area of bid bonds and contractors performing work for project owners. In this case, however, the construction job owner is the federal government, and all contracts being bid on are for federal construction projects.  

Under the provisions of the Miller Act, every contractor who bids on one of these federal projects is required to post a payment bond, which covers all labor and materials, as well as a performance bond, whenever the value of the project exceeds $100,000.

The requirements of Miller Act from the standpoint of the contractor are the following:

• The contractor must purchase a performance bond that provides a measure of protection for the federal government.
• The contractor must purchase a payment bond that covers suppliers, tutorials, and labor. This payment bond is generally required to be an amount equal to the total value of a project itself, and not less than the amount of the performance bond.
• All subcontractors involved in the job are to be covered under the terms of the payment bond, as well as all suppliers who provide materials for the project.
• All second-tier suppliers will also be covered under the payment bond, and the second-tier suppliers are those that would be hired by subcontractors.