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Maintenance Surety Bonds

What is a Maintenance Bond?

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  • Generally, the cost of the maintenance bond is included in the price of the accompanying performance and payment bond. The payment and performance bond will usually cover the maintenance period for up to one year after the project has been completed. If the Obligee requires a maintenance period that is greater than one year, then the surety will charge an additional premium. The additional maintenance period usually costs just a fraction of a percent of the overall bond amount.
  • However, sureties, in most cases, aren’t willing to bond a maintenance period that is greater than two years. This is due to a number of factors, but mainly due to the fact that after two years it is very difficult to determine the cause of defects. Therefore, most maintenance periods are 12, 18, or 24 months.
  • A  standalone maintenance surety bond can cost as low as 1-3% of the total bond amount per year. Of course, each bond is individually underwritten so the cost can vary and is dependent on a number of factors. These factors include the size and scope of the project, the personal and corporate financial standing of the Principal as well as the Principal’s personal credit score and industry experience.

Maintenance Surety Bonds are required to ensure that work and materials used on a project will be free of defects for a certain period of time after the project has been completed. The surety bond guarantees the Obligee is compensated for any damages due to these defects. This ensures contractors complete a project using skilled labor and quality materials and that the project will be built well enough to fulfil its intended use. Essentially, the bond protects the project owner from losing any money for having to repair any defects.

Construction contracts often stipulate maintenance periods where the contractor completing the project is responsible to repair any defects related to workmanship or materials for a certain period after the project is completed. Maintenance Surety Bonds are mostly used for construction on publicly owned projects. Although, some private project owners also require performance, payment, and maintenance bonds. The entity requiring the bond is called the Obligee. For public projects, the Obligee on the bond would be the state, city, county, or township, etc. You, the contractor, are the Principal on the bond. Most of the time surety bonds are required by law for construction projects that involve public funding.

Contact The ProSure Group! As surety bond experts in business since 1993, The ProSure Group has issued hundreds of Maintenance Bonds and has partnerships with more than 30 different surety companies. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.

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