What does a warranty bond do?
Sometimes called warranty bonds, a maintenance bond is a type of surety bond that protects the owner of a completed construction project for a specified time period against faults and defects in workmanship, materials, and design that could arise later if the work was done incorrectly.
What is a warranty bond and what does it do?
A warranty bond is a legal document that guarantees to the project owner that the contractor who did the work will come back and fix defective work or material should an issue arise during the warranty period specified in the contract.
How much does a warranty bond cost?
Cost of the Warranty Bonds
Typically, warranty bonds cost between 1 percent and 4 percent of the total bond amount. You can have the bond after paying for this premium.
What is the difference between a warranty bond and a maintenance bond?
Maintenance bonds are a type of construction bond that provide for the upkeep of a project for a specified period of time after the project is completed. … Maintenance bonds protect obligees against defective workmanship or materials, and are also referred to as “warranty bonds”.
What is guarantee bond in construction?
GUARANTEE BOND is furnished as a guarantee of the quality of the materials provided, the equipment installed, and the workmanship performed by the Contractor. … PERFORMANCE BOND is furnished as a guarantee of good faith on the part of the Contractor to execute the Work in accordance with the Contract.
What’s the difference between a guarantee and warranty?
A warranty is a guarantee of the integrity of a product and of the maker’s responsibility for it. In a sense, guarantee is the more general term and warranty is the more specific (that is, written and legal) term.
Who pays for a performance bond?
Performance bonds are typically provided by a financial institution such as a bank or an insurance company. The bond would be paid for by the party providing the services under the agreement. Performance bonds are common in industries like construction and real estate development.
What does a maintenance bond cover?
A maintenance bond “insures” the owner of a completed construction project for a specified time period against defects and faults in materials, workmanship, and design that could arise later due to shoddy workmanship.
How much does a 15000 bond cost?
The $15,000 California Contractor License surety bond costs between $102 to $450 per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience.
How much do you pay on a 15000 bond?
Surety Bond Cost Table
|Surety Bond Amount||Yearly Premium|
|Excellent Credit (675 and above)||Average Credit (600-675)|
|$15,000||$150 – $450||$450 – $750|
|$20,000||$200 – $600||$600 – $1,000|
|$25,000||$250 – $750||$750 – $1,250|
What is the difference between bonded and insured?
Insurance protects you in the event of an accident and allows you to operate legally. Bonds help create trust that you’ll complete the required project and allow you to work on public jobs.