Frequently Asked Questions

What is a Surety Bond?
A surety bond is a written document in which one party guarantees a second party's performance to a third party for the second party's failure to fulfill an obligation. There are three parties to a surety bond: the principal, the obligee, and the surety. The principal is the bonded person or organization that has the duty to perform in some way for the benefit of the obligee. The surety is the party that guarantees fulfillment of the principal's obligation to the obligee. The surety bond protects the obligee by guaranteeing performance to the obligee if the principal does not fulfill the obligation.

 

What is a Contract Bond?
Contract bonds guarantee the performance of public and private contracts.

 

What is a Bid Bond?
Bid bonds guarantee that the contractor submitting a bid, if awarded the construction contract, will enter into a formal contract with the owner and will furnish performance and payment bonds.

 

What is a Performance Bond?
Performance bonds guarantee that the obligee will be indemnified for any loss resulting from the principal's failure to perform the work according to the contract, plans, and specifications at the agreed price within the time allowed.

 

What is a Payment Bond?
Payment bonds, also referred to as labor and materials payment bonds, guarantee that bills incurred by a contractor for labor and materials will be fully paid at the completion of the project.

 

What is a Maintenance Bond?
A maintenance bond is a classification of bonds that guarantee that the contractor will correct faulty work and replace defective materials.

 

What is a License or Permit Bond?
License and permit bonds are surety bonds required by federal, state or municipal governments before they will grant a license or permit to conduct business in certain occupations or professions.