Before awarding a contract, any project owner can require the chosen contractor to provide a maintenance surety bond, often along with performance and payment bonds. They’re most commonly required for construction projects funded by taxpayer dollars.
Maintenance Bonds
At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about maintenance bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.
Contact Us for a Free Maintenance Bond Quote
It’s easy with our simple 3-step process:
- Personal Info
- Address
- Bond Type
who we work with
Our Insurance Company Partners Nationwide
about bond type
What Are Maintenance Bonds?
A common concern among construction project owners is that a defect will be discovered after the project has been completed and the contractor has received the final payment for the job. That could mean that the project owner would end up paying out of pocket to correct the problem—but not if the contractor has furnished a maintenance bond. A maintenance bond protects the project owner for a certain length of time after the completion of the project unless the defect is unrelated to the contractor’s work, such as a design flaw.
Who Needs Them?
How Do They Work?
A surety bond agreement is a legally binding contract among three parties known as the bond’s “obligee,” “principal,” and “surety.” In the case of a maintenance bond:
- The project owner requiring and protected by the bond is the obligee,
- The contractor required to purchase the bond and pay any valid claim is the principal, and
- The company guaranteeing the bond is the surety.
If it is determined before the end of the coverage period that the project fails to meet state or local building codes or the construction standards specified in the contract and the failure is attributed to the principal, the obligee can file a claim against the maintenance bond. The surety will investigate and ascertain whether the claim is valid and needs to be paid.
Although the legal obligation to pay the claim belongs entirely to the principal, the surety has guaranteed payment and therefore will pay the claim initially and then be reimbursed by the principal. If the principal does not repay the surety as required, the surety can take legal action to recover the claim amount, plus court costs and legal fees.
What Happens if a Claim is Filed?
As the bond’s guarantor, the surety will pay that claim initially, but it’s the principal who is legally obligated to pay it. Essentially, in paying the claim, the surety is extending credit to the principal, thus creating a debt that the principal must repay or face legal action by the surety to recover the claim amount plus any court costs or attorney’s fees.
costs
What Do They Cost?
The premium for a maintenance bond is the product of two factors: the required bond amount, which is set by the obligee, and the premium rate, which is assigned by the surety. The surety is primarily concerned about the risk that the principal won’t repay the debt created by paying the claim on the principal’s behalf. Consequently, the main consideration in assigning a premium rate is the principal’s creditworthiness, as measured by their personal credit score.
A high credit score means that the principal has a history of responsible credit use and on-time payment of debts, suggesting that the risk to the surety is low, which results in a low premium rate, generally in the range of 1% to 3%. Conversely, a low credit score means a higher risk level and warrants a higher premium rate, potentially in the 10% to 15% range.
location search
Choose Bond by States
We proudly serve all 50 states, offering a full range of surety bonds. To buy surety bonds online:
- Choose your state
- Choose the bond type you need
- Apply online to request a free quote
There’s no obligation, and we can often help you get bonded in 24 hours or less.
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
District Of Columbia
West Virginia
Wisconsin
Wyoming
Ohio
step by step guide
How Do Maintenance Bonds Work?
-
Choose Your Bond Type
Select the bond you need — commercial, contract, or any specialized bond. We help you find exactly what is required in your state.
-
Submit a Quick Application
Complete a short online form. It only takes a few minutes, with no extra paperwork or long verification steps.
-
Get Approved & Receive Your Bond
Get fast approval and receive your bond instantly by email. Your document is ready to use right away.
main reasons
Why Work With Us?
Easy Application Process
Simply fill out our convenient online application form to get started.
Extensive Carrier Network
We work with a wide range of carriers to provide many options to our clients.
Competitive Rates
As an independent agency, we can leverage our carrier network to find the most competitive rates for the bonds you need.
Quick Turnarounds
We work to get you bonded as quickly as possible, often in 24 hours or less.
Exceptional Service
Our experienced surety bond agents provide personalized assistance to help you understand your bonding requirements and options.
Testimonials
What our customers say about us
Request a Quote
Request an online quote today! Or speak with one of our knowledgeable surety bond agents about the commercial bonds you are interested in.