The name is bond, construction bond

Construction bonds are nothing but just a kind of surety bond which is essential to take for any financial investor before jumping into a construction project. It’s a contract in between the principal and the project owner in which the principal gives an assurance that he will complete the project as per the norms. Generally contractors are well aware of the concept of securing surety bonds. But it’s pretty tough understanding the relationship in between the principal, the obligee and the surety. Bond agents in DC or lawyers may help in such circumstances by playing a mediator in between these three parties.
There are various types of Constructions Bonds DC are required at each and every stage of a construction process. They entail of some different norms and guidelines, but possess the same motive, to protect the rights of parties involved in the project:

1.Bid bond:

The bid bond is prepared before a principal applies for a project. This process entails verifying the financial and market standings of a principal. The DC construction bonds or bid bonds are only sanctioned to a principal if he has sufficient financial and human resources. In this bid, both principal and surety can be sued by the obligee in case of failure of project. In case the principal refuses to bid the surety has to pay for the risk.

2.Performance bond:

The performance bond concern with assuring the principal will complete the project as per the contract norms, in given time frame and at the given price. If the principal fails to finish the projects according to the guidelines, the surety company is considered responsible for that. In such, the surety has to finish the project either with his own contractor, or by hiring a contractor. If the surety is not doing so, it has to pay the penalty amount to the obligee which is equal to the contract amount.

3.Payment bond:

This bond is prepared to protect the payment rights of the principal. The obligee or the project owner agrees that he/she will pay the contract amount to the principal in case the owner fails to complete the project. Along with that, it also ensures that the subcontractors and the suppliers will get their payment as per the norms. If the obligee fails to pay the amount, the principal may sue him/her or may break the contract.

4.Supply bond:

These DC construction bonds are created in between the principal and the subcontractor or suppliers. This ensures they will supply the required material in stated time period and at mentioned cost. It protects the principal from the loss of time or value.

Benefits of construction bonds:
•It ensure the project owner that the project will be completed according to the contract
•The principal ensure he will finish the project as per the guidelines
•It improves the reputation of the contractor or the contractor
•It improves the quality of work
•It improves the relationship in between the three parties
•It secures the rights of all three parties

Drawbacks of construction bonds:

•The surety company is most prone to the risk, no matter who is breaking the contract
•Once contract is signed, no one can break it even if a certain party is going through some kind of loss


Every contract depends on the reliability factor and the aspects it is required to fulfill for completion of the project. When referring to Construction Bonds in DC one need not to look for various options as Insurance Associates provides the best documentation service for any sort of Construction Projects.