A contractors bond is a bond purchased by a contractor in order to financially secure the construction that he or she is performing for a client. A bond prevents the client of a contractor from being financially responsible for any expenses incurred resulting from problems with the construction. A contractors bond will cover the expenses associated with the following scenarios…
The contractor does not complete the construction project to the client’s satisfaction.
The contractor walks off the job and construction halts.
Money is owed to the supplier of the building materials and the contractor cannot pay them.
Money is owed to subcontractors and the contractor cannot pay them.
Existing property at the construction site is damaged by the construction or by the employees of the contractor.
Building materials are stolen from the construction site.
Building materials are lost on the construction site.
In some states, contractors must be bonded in order to obtain a license.