Benefits of Maintenance Bonds in Construction

Maintenance bonds are one of the common bond types utilized in construction, and address potential issues after the completion of a project.

What is a Maintenance Bond?

A maintenance bond is provided by a contractor to the project owner and ensures that if any defects or issues arise, within a specified timeframe after the completion of a project, the contractor will address them at no additional charge. In essence, the bond acts as a warranty for the construction work. The specified timeframe can vary, but typically covers one or two years post-completion. 

Are Maintenance Bonds Always Required? 

Maintenance bonds are most typically utilized on public construction projects, but can be utilized on private projects as well. 

Why Use a Maintenance Bond?

For project owners, maintenance bonds provide a sense of security that they have recourse in the event that defects or issues arise within the specified timeframe after completion. For contractors, a maintenance bond speaks to their character, acts as an added incentive to do quality work, and promotes accountability.

How do I get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change.