In today's highly competitive construction industry, more and more contractors are required to provide surety bonds to guarantee their performance on construction projects. This is true of both general and subcontractors, as more owners and lenders are requiring the protection of surety bonds from general contractors, and as general contractors and their sureties are requiring the same protection from subcontractors.

Generally, there are three types of contract bonds:

• The Bid Bond:

Guarantees that the bidder will actually enter into the contract at the bid price and provide the required performance and payment bonds.

• The Performance Bond:

Protects the owner from financial loss caused by the failure of the contractor to build the project in accordance with the terms and conditions of the contract.

• The Payment Bond:

Guarantees that the contractor will pay all of the labor and material bills associated with the project.

Subdivision Bonds

• This category includes:
• Improvement Bond (Performance and Payment)
• Grading Permit Bond
• Landscape, Irrigation and Erosion Control Bond
• Monument Bond
• Completion of Common Facilities Bond
• Highway Encroachment Permit Bond
• Maintenance Bond
• Subdivision Tax Bond

Many municipalities and/or counties provide by ordinance that a developer who plans and develops a housing or industrial subdivision shall supply a bond to the city, county, etc. The bonds guarantee that, within a specified time, improvements on the property, such as street, sidewalks, curbs, gutters and sewers will be constructed.

License and Permit Bonds

License and Permit Bonds are required by state law or municipal ordinance or regulations, as a condition to granting a license or a permit to engage in a particular business.

Some examples of License and Permit Bonds are:

• Sales Tax Bond
• Motor Vehicle Dealer Bond
• Insurance Broker's Bond
• Collection Agency Bond
• Back up to List of Available Bonds. 

Various Court and Commercial Bonds

There are two types of court bonds: Fiduciary and Judicial.

Fiduciary Bonds:

Ensures the proper performance of the fiduciary's duties and compliance with court orders. Examples of these bonds are:

• Administrators
• Executors
• Guardians
• Trustees Under Will
• Liquidators
• Receivers

Judicial Bonds:

Required when a litigant seeks to avail himself/herself of privileges or remedies, which are allowed by law only upon condition that a bond be furnished for the protection of the opposing litigants or other interested parties. The purpose of this bond is to preserve the rights of the opposing litigant in granting the privilege or remedy. In all cases the conditions of the bond are prescribed by law, and only a bond which complies with the statutory requirements will be effective.

Commercial Bonds

Commercial Bonds come in many types and are often referred to as "miscellaneous Bonds". Included in this category are:

• Lost Securities Bonds
• Lease Bonds
• Workers Compensation Bonds (for self-insurers)