A warranty bond or a maintenance bond is a type of performance bond. As the name suggests, the bond assures that the completed work will remain in a satisfactory condition for a specified period of time. It requires that the contractor will maintain the project according to the set standards. If he/she does not, the project owner will receive financial compensation to cover costs.
Unlike most other bonds, warranty bonds cannot be obtained until the project is completed. The Federal Government requires contractors to have these bonds and its length can be determined depending on the terms of the contract.
Just like all the other types of surety bonds, there are three parties involved:
- The principal is the contractor who is required by law to obtain the warranty bond.
- The oblige is either the Government or the project owner. The Government requires this for the safety of their taxpayer, that is, the project owner.
- The surety agency is the entity that issues the bond.
Obtaining the Warranty Bond
Obtaining the warranty bond requires you to submit an application. Some of the required documents include:
- Your credit report,
- Financial statement,
- Business resume,
- Record of work history, etc.
Once these documents are verified by the surety agency, they can issue warranty bonds.
Cost of the Warranty Bonds
The cost of the warranty bond depends on many factors. Some of them include total amount of the bond, state in which it is to be issued, credit score, type of bond and so on.
Typically, warranty bonds cost between 1 percent and 4 percent of the total bond amount. You can have the bond after paying for this premium.
BondPro – A Reliable Surety Bond Agency
We at BondPro provide warranty bonds across 50 states of the United States, including U.S. Territories.
Here’s what makes us so unique:
Over the years, we have made our processes quite efficient. We understand that contractors with critical projects might require immediate help with warranty bonds. As soon as you submit your applications and documents, we verify them and start the process. Our team gets the job done in a few business days.
Over the years, we have had the experience of working with people from a diverse range of fields. This has helped us garner relationships in bond markets, which allows us to provide reasonable rates to contractors. We assure our clients that they are getting the best deal.
Our professionals have a combined 60 years’ of experience in the field. From incredible attention to detail to extensive knowledge of the field, we assure our clients that they will be working with seasoned professionals.
You can get an online quote from our website. Our team provides that in 24 hours. You can also call us or visit our offices.