There are already many risks associated with construction projects, but as a contractor your risks can have an impact on your employer or developer. For instance, if your company was unfortunate enough to go into liquidation, your developer would be left out of pocket for the outstanding work and materials. Having a bond in place means you are able to give your developer/employer peace of mind that they will recover some of their financial investment.
There are several types of bond, the most common type of bond being a Performance Bond; this protects the employer against disruptions or financial loss due to a contractor’s failure to complete the project or meet contract specifications. Most contracts are drawn for between 10%-20% of the contract price, and bonds are available on a stand alone basis or as an extension to your existing Contractor’s policy.