What is Bonding Insurance?
Bonding usually refers to a type of surety guarantee
that a specific project, service or act will be
financially covered if performance is not complete or
satisfactory. Some situations covered by bonding include
non-completion of a contracted project or service, cost
overruns, not meeting schedule, unsatisfactory quality
of work, damage to a customer's property while a project
is underway or injury to customer's personnel during
For example, projects or services involving
construction, home health care, electrical contracting,
real estate inspection, gardening services, delivery or
moving services, etc.
Companies or individuals providing these services
customarily secure a bond from a bonding company,
assuring that if a customer's project is not completed
or is not deemed to have been satisfactorily completed,
the bonding company will reimburse the customer for
Bonding is required because some customers will not
contract work out to companies or individuals that are
Bonding fees are charged based on the type of business
and financial risk involved. Most bonding companies
have special packages for certain type of industries.
Pricing and Coverage is competitive. You should shop
around before deciding on a policy.
Types of Surety Bonds
There are two types of bonds:
Contract Bonds (bid, performance, labor & material,
payment, indemnity bonds);
or permit bonds, which are required for many
occupations, including contractors.
An obligation undertaken by a bidder promising that the bidder will, if
awarded the contract within the time
stipulated, enter into the contract and furnish the
prescribed performance and payment bond's.
A bond which promises that the terms of a contract, or some of them, will
be performed by the Principal.
LABOR & MATERIAL BOND:
A bond that guarantees an owner (or general contractor) at a
construction site that a contractor (or
subcontractors) will pay for labor and material to be
supplied. It protects the owner or contractor against liens from
subcontractors, suppliers or laborers who are not paid.
A bond which promises to pay some or all of the persons who provide
materials, labor, or services
for prosecution of a contract.
A bond which promises
to reimburse an Obligee for loss incurred when a
Principal fails to perform
its contract or (in some cases) fails to pay for
material, services or labor used in prosecution of the
LICENSE (Permit) AND MATERIAL BOND:
A bond required of all licensed contractors in certain states
for the benefit of specific persons designated by
statue. Some of these states allow a cash deposit with
the state in lieu of a bond
Finding Bonding Insurance Service
See a list of Bonding Insurance Service