Maintenance Bonds

A maintenance bond, also known as a warranty bond, protects an owner against defects on a completed project for a specified period of time.  The maintenance bond is issued by a bonding company, also referred to as the surety, on behalf of a contractor.  The warranty period is usually just one or two years after completion of the project, but in can be longer depending on the owner and the type of project.  The limit of liability on the maintenance bond is typically anywhere from 10% to 100% of the contract amount. 

A maintenance bond is NOT an insurance policy.  If the surety pays a claim on a maintenance bond they’ll look to the contractor for reimbursement.  This can be confusing because it’s usually a large insurance company that acts as the surety, but it’s really a lot more like getting a line of credit at a bank than getting insurance.  You’ll sometimes hear that a contractor has a “Surety Line of Credit” which means they have an established program that allows them to bond a certain amount of work. 

Although the contractor is responsible for posting the bond, the maintenance bond is written to the benefit of the owner which can be the federal government, a private entity, a State or municipality, or any other entity that contracts work to be performed.

 

Can Baldwin Cox Allen help with maintenance bonds?

We can absolutely help!  Baldwin Cox Allen has been specializing in bonds for contractors since we opened our doors in 1989.  We have access to over 30 well established, “A” rated and Treasury Listed sureties and we’ll search the market for the right fit for your unique needs.  We’ll work hard to get the bonds approved for you, and then continue to work to improve your program and maximize your bonding capacity!