Contract surety bond

Contract surety bonds consist of three basic types:

  • Bid bond - This provides financial assurance that a bid has been submitted in good faith. It also affirms that the contractor intends to enter into the contract at the price bid and that the contractor will provide the necessary bonds such as performance and labour and materials.
  • Performance bond- This is the bond that most people think of when discussing surety. This bond assures that the contractor will perform the contract as specified. If the contractor fails to meet the obligations of the contract, then the surety company will see that the work is completed.
  • Labor and materials bond - This bond guarantees that the contractor will pay the specific subcontractors, laborers, and material suppliers associated with the specified project.