A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.
Normally, performance bonds are tied to a specific project and can’t be transferred. It's best to think of them as a one-time promise for a particular job.
Performance bonds generally last for the duration of the contract plus any warranty periods. It's like saying, 'I’ve got your back' until the job's done and then some!
Not quite! A performance bond guarantees the completion of a project, while insurance protects against unexpected events. They have different purposes, though both offer peace of mind.
If a contractor falls short on project requirements, the surety company steps in to cover the losses up to the bond’s limit. It’s like having an insurance policy for contract fulfillment.
Getting a performance bond involves finding a surety company that underwrites the bond. You'll need to provide some information about your business and the project at hand.
Not exactly! While both provide protection, a performance bond guarantees completion, whereas insurance covers losses from unforeseen events. They serve different purposes.
You can obtain a performance bond through a surety company or broker. They assess your financial health and experience before issuing one.