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.

Michael Stong

Partner

Mr. Stong is a graduate from Cal Poly Pomona with a Bachelor of Science degree in Business Administration with an emphasis in small business management. Mr. Stong started his surety career in 1979 working for Chubb Insurance Company in Los Angeles. He attained Senior Underwriter status before leaving the company to join Friis & Company in 1984 as a Producer. In 1986, Mr. Stong started his own surety only agency in Riverside, Stong Surety. Stong Surety gained a strong reputation for integrity in the surety industry and being a value-added agency for contractors seeking to maximize their surety relationship. This was accomplished by providing guidance and options to his clients on any aspect of their business, as well as maintaining a high level of trust and cooperation with his sureties. As a result of his approach, Mr. Stong enjoys many client relationships that have spanned over 25+ years. In 2020 Mr. Stong joined the team at CSBA bringing his staff and adding his office location in Riverside to continue his services to his clients and sureties, as well as continuing to grow his surety business.

Mr. Stong is actively involved in outside organizations. He is a member of the National Association of Surety Bond Producers, where he served as Regional Vice President of Region 2 (CA, AZ, NV and HI). He is also a member of the Surety Underwriting Association. He currently serves on a number of committees for the Greater Riverside Chamber of Commerce, recently serving as the President for the Magnolia Business council. Additionally, Mr. Stong is active in the Kiwanis Club of Uptown Riverside where he serves on the Board of Directors and is a past President.

Michael Stong

Partner

Contact Commercial Surety

Thanks for contacting CSBA!