FOR ALL YOUR SURETY BOND NEEDS.
These surety bonds are general for all states.
Learn more about maintenance bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Maintenance Bonds?
A maintenance bond, sometimes referred to as a warranty bond, is a type of contractor surety bond that is designed to protect the owner of a completed construction project against financial loss due to construction defects and problems associated with materials and workmanship that may not be immediately apparent. The bond remains in force for a specified period of time, usually between 12 and 24 months, during which the project owner will need to identify any construction issues that must be corrected.
Who Needs Them?
The contractor is the principal who must purchase the bond. The project owner is the obligee, and the company issuing the bond is the surety. You’re more likely to be required to obtain a maintenance bond if the obligee is a government agency rather than a private entity.
How Do They Work?
The bond remains active for only a specified period of time. If the obligee suffers a financial loss as a result of the contractor’s actions during that period, a claim can be filed against the bond. Any workmanship or material issues that surface after that period are not covered.
For example, suppose that the contractor knowingly used an inferior grade of cement, and cracks appear in a foundation wall during the time that the maintenance bond is in effect. The contractor could be given the chance to correct the problem at no additional cost to the obligee, or the obligee could choose to file a claim against the bond to cover the cost of having another contractor remedy the problem.
The surety will investigate any claim and pay the obligee if the claim is found to be valid. The contractor, as principal, must reimburse the surety for the amount paid against the claim.
What Do They Cost?
The surety will run a credit check on the contractor before approving an application for the bond. This is meant to ensure that the contractor has the financial resources to reimburse the surety for any claims paid out on the bond. An applicant with good credit is likely to pay a premium rate of between 1-4% of the bond amount. The final cost is determined by multiplying the bond amount by the premium rate percentage.
Apply Now
Use our convenient online system to apply for a maintenance bond today.
