KOG International Services the Construction Industry with Surety Bonds.
A surety bond is a three-party relationship between the contractor (principal), owner (obligee), and surety company (guarantor). In construction, there are 4 types of bonds that fall under the term surety bond; bid bonds, performance bonds, payment bonds and maintenance bonds. A surety bond is NOT an insurance policy. A surety bond for a construction project guarantees that a contractor completes the work stated under the contract and pays their suppliers and subcontractors as agreed on the bonded job. If the contractor (principal) fails to complete the job as stated in the contract, they, along with the surety company (guarantor) are held liable to complete the project in accordance with the contract.
- The bid bond allows a contractor to bid on a project that is requiring a performance and payment bond. The bid bond is a “pre-approval” for the contractor, and guarantees that if they are low bidder they will supply a performance & payment bond to the obligee.
- The performance bond guarantees that the contractor will complete the project in accordance with the contract and specifications. The performance bond protects the obligee from being left with incomplete or inaccurate work.
- The payment bond guarantees that the contractor will pay their subcontractors and suppliers as agreed on the bonded project. This bond also guarantees that lower tier subcontractors and suppliers will be paid. The payment bond protects the obligee from liens being put on the project.
- The maintenance bond is written after a project is complete. It is usually written for a 1- or 2-year period. It guarantees that the work is completed satisfactorily and will not fail after the contractor leaves. If there is work that is deficient within the maintenance bond period the contractor is responsible to correct the work accordingly.
- General Construction
- Specialty Trades
- Subdivision/Site Improvement
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