License / Permit Bonds

R License / Permit Bond

Many municipalities and states require contractors to obtain license / permit bonds in order to obtain building permits or contractor licenses.

Requirements / Cost

License and Permit bonds generally require basic underwriting information, sometimes a short application, and proof of insurance. These bonds are typically valid for one calendar year.

Bid Bonds

A bid bond assures the contractor’s bid was submitted in good faith, and the contractor intends to enter into the contract at the submitted price.

Performance Bonds

Often a part of the bid bond, the performance aspect of the bond protects the owner from financial loss should the contractor fail to perform (complete) the contract in accordance with the terms and conditions of the contract.

Payment Bonds

This bond is paid to the suppliers of labor and materials by the contractor upon a successful bid to ensure that the contractor will pay in full at the end of the project. The payment bond usually represents 20% of the total project cost.

Supply Bonds

Guarantees fulfillment and performance of a contract to furnish specified supplies or materials according to stated terms.

Subdivision/Completion Bonds

Guarantees to a city, county, or state that the principal will finance and construct certain improvements such as street, sidewalks, curbs, gutters, sewer and drainage systems.

Maintenance Bonds

Guarantees against any possible defects (of the principals work) after the completion of a contract for a specified period of time. Maintenance periods vary from 12 months up to 60 months after completion and acceptance by the owner.