What is an Insurance Bond?

An insurance bond is a requirement by project owners when they look for contractors to fulfill a contract. This bond helps ensure that the contract will be completed in case the contractors default on the project. The insurer will then be obligated to compensate the project owners for the loss of income when work is not completed.

Typical Insurance Bond Types

There are many types of insurance bonds available. But here are the most common ones that are recommended for business owners:
  • Ancillary Bond. This makes sure that the pertinent requirements to the contract, but indirectly-related to performance, are fulfilled.
  • Bid Bond. This makes sure that the contract bidder will get into the contract and deliver on the required payment and performance bonds when given the project.
  • Payment Bond. This makes sure that subcontractors and suppliers are being paid for the work they did under the contract.
  • Performance Bond. This makes sure that the project will be completed according to the terms and conditions agreed on the contract.

Know what insurance bond is right for you, contact us to learn more. 

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