Bonding is a financial guarantee or debt security held by contractors to ensure their contractual obligations are met. It is completely separate from general insurance policies.
Bonds that guarantee the contractor will pay their sub-contractors and material suppliers include:
- Bid Bonds (job tender)
- Labour and Materials
What do they guarantee?
Bonds guarantee that at any stage of the project, should the contractor default or choose not to complete it, the bonding company will ensure the obligations are met.