You can now apply online for a Performance Bond - it only takes three (3) minutes! (Yep, we timed it.) Click here:
- Complete the form and email to [email protected]
- Be sure to include the Contract and Notice of Award letter (bid specs from the obligee).
- Send the bid results if you have them
What is a Warranty Bond?
A Warranty Bond, also known as a Maintenance Bond, safeguards the owner of a completed construction project for a specified period. This ensures against potential issues with workmanship, materials, and design. Such a bond becomes an important ingredient when contractors may not be able to offer the best guarantees due to limited experiences or financial stability. This bond from Swiftbonds will cover any flaws for up to ten (10) years post-construction completion at nominal regular premiums.
How Much does a Warranty Bond Cost?
What should you expect to pay for a Warranty Surety Bond? Rates, much like credit scores, can fluctuate depending on the bond amount, type of work and risk involved. For high-risk jobs in the construction sector, you may be quoted 1-15%. This translates into $1 -$150 per 1000 worth borrowed!
With Swiftbonds, you can anticipate paying roughly 0.5-1% per year for the Warranty Bond on a typical performance contract bond. This rate takes into account your credit score and the needed coverage.
Does a Standard Performance Bond Cover the Warranty Period?
Performance & Payment Bonds come with a one-year warranty managed by our expert team. Remember, these bonds respond directly to the contract itself. So ensure that it's worth your while as premium rates include cost associated with these types of warranties.
For a warranty extension beyond the first year, an additional cost will be incurred.
Warranty Bond Guarantee - The photo represents a certificate of guarantee with a gold and white background.
A warranty bond ensures that the project will be repaired if there are any defects in materials or workmanship. This bond guarantees the repair of a project should there be defect in workmanship or materials, ensuring the project is completed according to specifications and on schedule.
What is the difference between a bond and a warranty?
The essence of a performance warranty is to assure the project owner that should any problems arise, they will be resolved. Unlike workmanship and materials warranties which are limited in duration; this assurance is a testament for an extended time; spanning several years, providing peace of mind for the owner.A contractor, like those in any other job, may have their own insurance policy requirements before signing off on agreements. These demands often center around aspects of greater protection than what is offered by merely replacing or repairing faulty products under manufacturer's warranty policies. Performance guarantees/">guarantees often afford these contractors additional protections such as design alterations, cash indemnity payments (a form of money security) during construction delays not caused by them, and even time extensions beyond what initially agreed.
What are Warranty Bonds and How Does a Warranty Bond Work?
Usually, contractors require insurance policies that not only cover repairs but also provide a safety net in terms of funds, for situations that are out of their control. A warranty bond guarantees the repair of a project should there be defective materials or workmanship, while performance bonds, essentially a security investment by the bondholder, guarantee that projects will be completed according to contract requirements and on time. One prevalent misconception about performance bonds is that they apply only to projects with a low probability of success. This isn't the case. Large and complex construction jobs, for instance, require them to assure completion within deadlines stipulated by contract terms.
How Does a Maintenance Bond Work?
A warranty bond is a legal document that assures the project owner that if an issue arises with defective work or materials during a specified time period, then they will be compensated by the concerned parties. Similar to insurance policies, a warranty bond provides considerable peace of mind as it confirms that the work was duly executed and will continue to last. Its role in assuring customers about the quality and longevity of the work cannot be overstated.
One such document is the AIA A313 Warranty Bond form, a standard in the construction industry and a prerequisite for many customers, which can be found here.
What is a Performance Warranty?
For instance, let's suppose a HVAC contractor installs a cooling system for an office complex. Assuming one of the cooling pipes breaks within the first nine (9) months, the Obligee could claim on the bond for the pipe to be repaired and any consequent damages. Regardless of the initial construction work being done properly, the contractor would need to absorb the cost of repairs. For maintenance work outside of the first year, a warranty bond could be procured, extending the maintenance period, thus making the contractor legally accountable for any additional maintenance issues. In a situation where the contractor is defunct, the surety would have to locate another contractor to fix/replace any issues during that maintenance period. As demonstrated, the maintenance bond offers considerable security to the property owner.
Warranty Bond Definition (Maintenance Bond Definition)
If you're wondering what contractor maintenance and warranty bonds are and how to acquire them, don't fret! Reach out to us here at Swiftbonds today and let us address all your queries regarding this topic.
Example on How a Warranty Bond Works
For example, let's assume that a HVAC contractor installs a cooling system for office complex. Let's assume that one of the cooling pipes breaks within the first nine (9) months. The Obligee could then make a claim on the bond for the pipe to be fixed and any damages. The contractor, even though the initial construction bond work was done properly, would have to fix the damages. For maintenance work outside of the first year, the warranty bond could be taken out, which would extend that maintenance period. This would make the contractor legally liable for any additional maintenance issues. If the contractor is defunct, then the surety would have to find another contractor to fix/replace any issues during that maintenance period. As you can see, the maintenance bond provides significant peace of mind to the owner of the property.
Conclusion - A Summary on Warranty Bonds & Maintenance Bonds
When it comes to contractor maintenance and warranty bonds, you're probably wondering what they are and how to get them. Don't worry! Get in touch with us here at Swiftbonds today so we can answer all your questions about this topic.