A contract bond is a type of performance bond. The bond provides a guarantee that all obligations outlined by a contract will be met. There are many types of contract surety bonds including:
Contract surety bonds involve three key parties:
Contract bonds are common in the construction industry. They are often required by businesses and government agencies that need construction work completed. If you're bidding on or undertaking a project you may be required to get a contract surety bond prior to beginning the project.
It's also common for general contractors to require subcontractors to be bonded when hired to complete work on a project. In these instances, the general contractor is the obligee while the subcontractor is the principal.
Some project developers may require you to have a contract surety bond to work on a project or take part in project bidding process. This requirement helps to protect them financially as a surety bond ensures that they get their project completed to the defined contract terms. If the contractor fails to complete the work the bond underwriter (surety) will provide financial compensation or take the necessary steps to get the project back on track.
There are a number of factors that affect the cost of a contract bond. Some of the main factors are the amount being covered by the bond, the credit history of the business taking out the bond, the project contract terms, and the businesses resume. The bond premium will also depend on the type of contract bond needed. The average cost ranges between 1% and 15% of the bond amount.
The application process for surety bonds can seem confusing, but Viking Bond Service is here to help make the process quick and easy. Our friendly and efficient team helps make us the premier contract bond agency in the US. Call us today to get started.
Quotes are available for clients with low credit. In many cases, a bond is not out of reach simply due to bad credit.
The bonding process for an Auto Dealer is simple. Start with a quote, end with your bond in hand. We keep the process simple.
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A Performance Bond is a type of Contract Bond. These typically involve an awarded contract. Read on to learn more.