Maintenance Bonds

Maintenance bonds are a type of construction (or contract) bond, however they usually aren't required by law and thus aren't utilized as frequently as are other construction bond types. Contractors and construction companies get a maintenance bond to guarantee against defects for a specific time period following a project's completion.


How do maintenance bonds work?

After completing a construction project, contractors will secure a maintenance bond to guarantee that the work was finished according to contract and without other errors. Maintenance bonds protect against:

  • design defects
  • workmanship faults
  • other issues that stem from problems during the construction process

If an issue involving any part of the project arises and a claim is filed against the bond, the bond company will ensure that the problem is remedied by either the contractor or another individual—or else pay the appropriate financial compensation. This is also how maintenance bonds guarantee that you're getting the most bang for your buck during a renovation.

Maintenance bond terms

Maintenance bonds are valid for a limited time. Since many construction issues emerge after a short time, maintenance bonds protect against most construction faults and problems for a wide array of projects. Once they expire, the workmanship—as well as the contractor—is no longer under any guarantee and thus is not accountable for future problems. Since maintenance bonds are only effective for a limited time and only protect against defects that stem from the construction itself, they should not be considered substitution for other maintenance plans or insurance. However, during the bond's term they can provide additional peace of mind for the project's owner.

How do you get a maintenance bond?

Contractors/construction companies typically purchase their maintenance bonds from either a surety company or an insurance company—although surety bonds are not a form of insurance. The bond's exact amount and cost will vary depending on the principal's credit score and financial stability. The surety provider will evaluate each to make sure that the contractor can pay the face value of the bond should there be a claim against it. If the contractor has subpar credit, he or she will have to purchase the bond from a company specializing in bonds for those with poor credit, which will make the bond cost more.

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