1. Industry
Send to a Friend via Email

Your suggestion is on its way!

An email with a link to:


was emailed to:

Thanks for sharing About.com with others!

You can opt-out at any time. Please refer to our privacy policy for contact information.

Discuss in my forum

Construction Bonds Basics


Bonds are required on almost every single construction project. Understanding construction bond is an essential area that you must dominate to be able to get the best deals from sureties and insurance companies. This is a list of the most common construction bonds required as part of all construction contracts.

1. Bid Bond Basics

Miami Real Estate Continues Streak Of Monthly Sales And Price Increases
Joe Raedle/Getty Images News

A bid bond is important to show proof of guarantee to the project owner that you can comply with the bid contract and also that you can accomplish the job as laid out in the contract.

2. Performance Bond

J Rodriguez

Performance Bond guarantees for the satisfactory completion of a project. This will require having a collateral property or investment to back up the requirements of the surety agency. A performance bond is usually issued by a bank or an insurance company, both of which act as a 'surety'.

3. Hold Harmless Agreement

The provisions under a Hold Harmless agreement will minimize the risk of being part of a litigation or allow you to pursue a claim for indemnity if a subcontractor or any of his employees sustain an injury.

4. Mechanics' Lien


A Mechanics' Lien is an extraordinary remedy for contractors, subcontractors, and others related to the construction industry to resolve payment problems.

5. Payment Bond

The payment bond forms a three-way contract between the Owner, the contractor and the surety. The Payment Bond guarantees that all sub-contractors, laborers, and material suppliers will be paid leaving the project lien free.

  1. About.com
  2. Industry
  3. Construction
  4. Construction Management
  5. Construction Bonds Basics

©2014 About.com. All rights reserved.