- June 24, 2016
- Posted by: Surety Bond Experts
- Category: Construction Bonds, Contract Bonds
In the surety bond business, there are often terms which can cause confusion. Are they the same thing? Are they different? We can apply these questions to the terms “contract bond” and “construction bond”. Essentially, they are two names for the same thing. A contract bond is most commonly used in the construction industry, and therefore a “contract bond” and “construction bond” tend to refer to the contract bond used in the construction industry.
To clarify, a contract bond is a surety bond which ensures that the contractual obligations are fulfilled. If there is a failure to fulfill the contractual obligations, then the project developer can file a claim to help recuperate any financial losses incurred.
Sometimes, the project developer may require multiple different construction bonds throughout the duration of the project. This is done to ensure that the contract is fulfilled completely and on time. In the case of public projects, surety bonds are almost always required in order to begin construction. On the other hand, private project developers may also require different kinds of surety insurance, before the project can begin.