Surety Bonds

Surety – Contract Performance and Commercial Bonds

Surety bonds are available to cover different parts or phases over the life of a construction contract. The purpose of
surety bonds are to provide the principal client (project owner) with a level of financial compensation in the event of the default or failure of a contractor under a construction contract.

There are a range of bonds available to contractors to meet a number of contract requirements include:

  • performance bonds
  • maintenance bonds
  • bid bonds
  • retention bonds
  • advance payment bonds, and
  • off-site materials bonds.

Surety bonds are designed for:

  • general builders
  • civil, heavy and specialist engineering
  • manufacturing, and
  • mining.

Contract Bonds

Set up by contractors for the benefit of their customers or potential customers (‘the principal’), Contract Bonds provide security against default or non-performance. When compared with a bank guarantee, they have the advantage of not tying up working capital or lines of credit.

Contract Bonds include:

  • Bid Bonds are submitted with a bid or tender to ensure that your client will actually enter into a contract if their bid is accepted. A Bid Bond also guarantees that a performance Bond will be supplied.
  • Performance Bondssupport the contractor's obligations during a contract period providing security to their customers against default or non-performance.
  • Advance Payment Bonds serve to secure the principal's position where funds are advanced to your client for the purposes of the pre-purchase of equipment or site establishment.
  • Retention Release Bonds provide security to the principal where funds are advanced to your client from the retention fund.
  • Maintenance Bonds secure your post-completion obligations during the warranty or latent defects period, usually 3 to 12 months post-completion.
  • Off-Site Material Bonds cover the principal in respect of goods or materials produced and held off site and paid for by them. The Off-Site Materials Bond responds where the goods or materials are not available when required for incorporation into the contract.

Commercial Bonds

Commercial Bonds cover regulations and commercial contractual obligations and include:

  • Residential Deposit Bonds provide a convenient way to secure residential (home or investment) property without having to release capital.
  • Commercial Deposit Bonds provide a convenient way to secure business (office, industrial or retail) property without having to release capital
  • Lease Performance Bonds issued at the request of a tenant in favour of their landlord and provide financial protection in lieu of a security deposit on a lease agreement.
  • Probate/Transfer Indemnity Bonds provide a fast and inexpensive way to release assets from a deceased estate without having to obtain a grant of probate.   

So call CPR Insurance Services for more information or assistance if you need to obtain any of these Bonds.

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And of course we thank all our clients for their fantastic support over the eight years of our business, who if not for them, we would not have a business. Thank you.

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