While a number of obligations on a contractor’s part are relieved toward the conclusion of a construction project, a construction owner’s concerns remain present.
A contractor needs to provide assurance regarding the safety and upkeep of their work after the project is completed.
A maintenance bond is a type of surety bond that provides that guarantee. Maintenance Bonds are typically written as part of a Contract Performance and Payment Bond. However, some are “stand alone” Maintenance Bonds.
A Means of Assurance
Although a construction work may seem adequate, the devil often resides in the details.
Long after the project is concluded, defects concerning materials or laborer’s workmanship may show up.
Without an appropriate contract, construction owners may have no way to gain financial reparation for any unsatisfactory work.
As a contractor, acquiring a contract maintenance bond helps to establish your reputation and dependability to curb the concerns of a construction owner, regardless of whether the project falls under a public or private capacity.
The maintenance bond will assure the concerned parties that a contractor will:
- Maintain a standard quality of work
- Conduct construction work in compliance with industrial standards
- Adhere to building codes and state regulations
- Employ quality material and competent workers
Given that the terms of a maintenance bond cover aspects of safe and fair practices on a contractor’s part, it protects obligees against damages and losses in the project—hence the reason this bond may also be called a “warranty bond”.
The obligees hold the right to file a claim against the bond in case of defective work. The contractor, known as the “principal” of the bond, is obligated to reimburse the Surety Company on the bond any costs of the claim.
A maintenance bond is termed for a limited time, and will protect obligees against problems that arise within that time. The bond applies to the principal’s contract or subcontract work.
If a problem emerges during its validity, an obligee can bring action against the bond. The bonding company will fulfill the maintenance obligation up to the amount defined in the bond. If a problem emerges after its validity is expired, neither the bonding company nor the principal is responsible for the payout.
Although a maintenance bond provides a temporary safety net for the contractors—and allows them the time to generate the costs involved in compensating the obligees—it is wise to avoid the possibilities of such claims.
If you are looking to get underwriting services for maintenance bonds, BondPro is here to help. As an online bond company, we promise accessibility in our efficient bond writing services as well as complete privacy of the information you provide to us.
Get in touch with our bond experts to get your surety bond today!