What are the Types of Surety bonds?

The three most common types of surety bonds are: Bid Bonds Performance Bonds Payment Bonds

Are Surety Bonds paid monthly?

No. You don't pay month-to-month for sureties. When you are quoted a price for a surety bond, you make a one-time payment.

How do I apply for a surety bond?

Applying for a surety bond, no matter the sort of bond, is to contact a surety agency. For instance, you can reach CSBA here to get started on obtaining your surety bond.

What is a payment bond?

A payment bond ensures that all of a contractor’s laborers, subcontractors, and suppliers are paid on a particular project.

Who requires payment bonds?

Payment bonds are required on almost all public projects. General contractors sometimes require them of their subcontractors, and occasionally private owners will require them.

Who pays for a payment bond?

The contractor, or principal, purchases the bond and pays for it.

Do Payment bonds expire?

Payment bonds expire after the project is completed and statutory timeframe have lapsed.

What is the difference between a surety bond and a payment bond?

A payment bond is a type of surety bond. The only real difference is the qualifying term, in this case, it's "payment" and only notes what sort of surety bond it is.

What does a performance bond cover?

The performance bond covers the owner of the project against losses if the contractor fails to deliver on the project within the contractual provisions.

How long does a performance bond last?

Since performance bonds guarantee the completion of the contract, they last until the project is finished along with any required warranty period included in the agreement.

When can you release a performance bond?

Usually, a performance bond is released when the project is completed, though some public projects stipulate that a contractor gives a warranty following completion that the performance bond covers.

What is the difference between a performance and a payment bond?

We have a detailed article that explains the differences here , but the short answer is that the performance bond secures the contractor's promise to complete a job within the terms and conditions outlined at the agreed price while the payment bond protects subcontractors, vendors, and laborers against nonpayment.

What is the difference between a bid bond and a performance bond?

Bid bonds are required when contractors bid a project and guarantees if they are low bidder, they will enter into the contract and provide any required performance and payment bonds. Performance bonds guarantee the actual performance of the work to be completed by the contractor according to the terms of the agreement. What happens to a bid bond after a contract is signed? The bid bond is replaced by a performance bond if the bid is accepted and the contractor enters into a contract with the owner or general contractor.

Frank Morones

Partner

Mr. Morones is a graduate of Menlo College where he received a Bachelor of Arts degree in Mass Communication with an emphasis in marketing and sales. He began his bonding career with CNA Surety in 1994 as a Surety Underwriter. Over the next 10 years he also worked at Travelers and The Hartford. Here he developed comprehensive underwriting skill and established strong relationships within the surety industry.

In 2004 he became a Surety Bond broker, and in 2011 established CalWest Surety as Owner/President. There he built an agency of integrity and strength establishing relationships with Surety companies and trust of his contractors. His 10 years as a Surety Underwriter give him a unique perspective and understanding of what Surety companies are looking for in a successful contractor. His guidance helps his clients form strong partnerships with the Surety companies to maximize surety bond credit.

At CSBA Mr. Morones is responsible for satisfying the bond needs of his clients and acquiring new business. He has been involved with various organizations including the Engineering Contractors Association, Surety Underwriting Association, National Association of Surety Bond Producers and Associated General Contractors.

Frank Morones

Partner

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