Surety Bonds 101

WHAT’S A SURETY BOND?

Obligates one party, the surety, to a second party, the obligee, to answer for the default of a third party, the principal contractor.

WHAT’S A BID BOND?

Provides financial assurance that a bid has been submitted in good faith and that the contractor will enter into the contract at the price bid and provide the required performance bond and payment bond.

WHAT’S A PERFORMANCE BOND?

Protects the owner from financial loss, should the contractor fail to perform the contract in accordance with its terms and conditions and completion timeframe – also provides one year of warranty protection.

WHAT’S A PAYMENT BOND?

Guarantees that the contractor will pay subcontractors, laborers and suppliers associated with the project.