Contract Bonds
A contract bond guarantees that the terms and conditions of a contract are fulfilled. A standard in government construction projects, this surety bond gives a project owner recourse for financial compensation (or other stated provisions) if the contract is not met.
Also known as construction bonds, contract bonds are required for general contractors, subcontractors, tech companies, and any company working on a project where a bond is outlined in the contract. Issued on a project-by-project basis, construction bonds ensure licensed contractors adhere to the contract until project completion.
We offer the following Contract Bonds:
Filter Bonds
Types of Contract Bonds
Below are the most common types of contract bonds in the construction industry.
- Bid Bonds: A bid bond is often required when bidding on projects to assure the project owner you will enter into a contract and purchase additional bonds if awarded.
- Payment Bonds: A payment bond guarantees everyone involved in the construction project, including subcontractors, laborers, and suppliers, are compensated.
- Performance Bonds: A performance bond assures project owners contractual obligations will be met and according to state regulations and standards.
Construction Bond Cost
The cost of a construction bond can range between 1% - 3% of the contract amount. The bond type, the project size, and your financial strength are a few factors that can affect how much you pay for a contract bond.
How do contract surety bonds work?
There are three entities involved in construction surety bonds:
- Principal: Contractor purchasing the bond
- Obligee: Project owner requiring the bond
- Surety: Bonding company issuing the bond
Before entering a public works project, you will be required to purchase the required contract bond(s) through a surety company and submit them to the project owner.
Once you’re awarded the project, you’re required to fulfill the contractual obligations. If, along the way, you’re unable to complete the project or pay those involved, the project owner can make a claim against your bond.
The surety you purchased the performance and payment bonds from will investigate the claim and reimburse the project owner for financial loss. At that point, you’ll be obligated to repay the surety.
Get Your Contract Bond
Whether you’ve purchased a construction bond before or this is your first time applying for one, NNA Surety can help you get bonded. Call 855-339-6183 or email us today, and we can help you get the right contract bond(s) for your company.
Contract Bond Resources
People who work in a variety of industries—including immigration consultants, tax preparers, contractor services, and many others—need to get bonded. But not all bonds are created equal. This guide covers the most important things you need to know about getting the right surety bond to meet your business needs and what that bond really means.
Learn More About the Steps to Secure a BondWhether you're getting a surety bond for the first time—or getting different policies as your business grows—it’s important to understand how bond costs work. The rate you pay for a surety bond is known as the premium, and its amount depends on a variety of factors that are explained in this guide.
Learn More About the Cost of Surety Bonds