Types of Bonds

Contract Surety Bonds

Contract bonds, used heavily in the construction industry, are a guarantee from a surety to a project’s owner (obligee) that a general contractor (principal) will adhere to the provisions of a contract.

Contract Bonds include the following:

  • Bid Bonds guarantee that a contractor will enter into a contract if awarded the bid
  • Performance Bonds guarantee that a contractor will perform the work as specified by the contract
  • Payment Bonds guarantee that a contractor will pay for services and materials
  • Maintenance Bonds guarantee that a contractor will provide facility repair and upkeep for a specified period of time
  • Site Improvement Bonds guarantee that public property will be restored upon the completion of a private project, in which the principal owns the land
  • Subdivision Bonds guarantee that the landowner completes mandatory public improvements that builders and developers make to their property
  • Supply Bonds guarantee payments to suppliers

Commercial Surety Bonds

Commercial Bonds represent the broad range of bond types that do not fit the classification of contract. They are generally divided into four sub-types:

  • License and Permit Bonds guarantee the principal will abide by the terms of the license¬†for which¬†the bond is filed
  • Court Bonds guarantee the defendant returns to court
  • Public Official Bonds guarantee the Public Official will faithfully perform the duties of his/her office
  • Miscellaneous Bonds are guarantees not otherwise classified above