Bonds are a different type of insurance. They are usually short term and have a very specific function. There are several different construction bonds that cover different issues that may arise when doing a construction project. Any of these bonds can be written through one of the Maryland construction bonding companies.
A tender or bid bond is submitted with a bid for a job to prove to the project owner that the contractor will honor their bid. It is also proof that the contractor, if hired, will be able to purchase a performance bond as well. In a performance bond the insurance company has a set value of funds that are available. These funds are in place in the event the contractor was to default; the owner would not be out the additional money to have the project for which the contractor was hired to be completed.
A maintenance bond is similar to a performance bond in that it provides yet another guarantee to the project owner. In this case the maintenance bond will guarantee the contractor will fulfill their obligations of the written contract. This extends to any maintenance or defective work.
The most beneficial bonds may be the stage payment bonds or advancement bonds. These types of bonds provide the contractor with a direct service. These bonds give the contractor funds to purchase the necessary supplies to begin the job without impacting their cash flow.
All of these bonds can be purchased with the help of an insurance agent and Maryland construction bonding companies.