PERFORMANCE AND PAYMENT BONDS (P&P Bonds)
Generally preceded by a bid bond, the contractor is required to submit a performance and payment bond as a security for job completion, protecting the client’s interests against financial loss in the event that the contractor goes bankrupt or is otherwise unable to complete the job. Through P&P bonds, the client is guaranteed compensation against any losses incurred. In the majority of cases, both of these are required.
Costs and amounts are determined by risk. In the event that the contractor has had one or several claims against him or his company, the risk would be considered higher, and so the premiums would be higher as well.
Construction Performance Bonds
This type of surety is issued to guarantee a contractor’s satisfactory completion of a building project. Performance bonds help to ensure the nature and quality of the work done, providing a guarantee that the job is completed as per the terms of the contract and to the client’s specifications.
Construction Payment Bonds
A construction payment bond ensures that the contractor will pay the labor and hard costs that they have committed to (i.e., for materials used in the construction). This also ensures compensation for all participants and subcontractors on the job in the event that the contractor defaults.
If you have any questions about, call today to speak to one of the experienced surety experts at Contractor Surety Group. No matter how big or complex your construction job is, we’re here to help.
If you know the scope of your project and are ready to start the process, simply fill out an application.