What is an Insurance Bond?

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An insurance bond ensures contract completion in the event of contractor default and are typically required by project owners when seeking a contractor to fulfill a contract. 

The contractor obtains a bond so the insurance company is obligated to compensate the project owner for the financial loss incurred if the work is not completed. ​

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Typical Insurance Bond Types

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Although there are many types of insurance bonds, the four most common types needed by business owners are:

• Bid Bond - Ensures the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the contract.

• Payment Bond - Ensures suppliers and subcontractors are paid for work performed under the contract.

• Performance Bond - Ensures the contract will be completed in accordance with the terms and conditions of the contract.

• Ancillary Bond - Ensures requirements integral to the contract, but not directly performance related, are performed.

Contact us to learn more about the right insurance bond for you.