Supply Bond

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Supply Bond Guide is licensed to issue construction bonds in every state. No matter where you work, we can bond you! 

What Is a Supply Bond? 

A supply bond, or material supply bond, ensures a supplier will produce the materials specified in a construction contract. If a supplier defaults, the bond holds suppliers financially accountable for missing, late or defective materials. 

How Do They Work?

A supply surety bond is a type of construction bond that binds three entities together in a legally binding contract: 

  1. The principal is the supplier who purchases the bond.
  2. The obligee is the government agency or another project owner that requires the bond.
  3. The surety is the underwriter that issues the bond and backs the supplier.

If the bond terms are breached, the obligee can file a claim against the principal. For any valid claims, the surety will compensate the wronged party for their loss. 

What Is the Average Supply Surety Bond Cost? 

The average cost of a supply bond is calculated at 2–3% of the total bond amount. The bond amount is usually the total value of all the materials needed for the project.  

However, exact costs will vary depending on the applicant, the bond amount and the obligee. 

Supply Bond vs. Performance Bond: What’s the Difference? 

A supply bond covers incidentals involving materials, but it does not cover any type of labor. Performance bonds are a guarantee that a contractor will complete a construction project according to terms and ensure labor coverage. 

How to Get Your Supply Bond

Submit a quote request now to get started. Our surety experts will help guide you through the application process and find the best possible rate for your supply bond. 

Call 1 (800) 308-4358 to talk with a Surety Expert