Warranty Bond



A warranty bond provides assurances to the owner of property recently constructed or remodeled that materials under warranty have been properly maintained.

Uses

  • Guaranteeing the quality of your construction work, materials, and equipment
  • Reducing a property owners risk of receiving defective construction work or materials

Overview

When you purchase equipment and materials for a construction or remodeling project, they often come with warranties against defects from the manufacturer or installer. A warranty bond guarantees that a contractor on a construction project will resolve all warranty-related issues on construction materials before the warranty runs out. A warranty bond is a type of insurance.

A warranty bond is a contract between three parties: a property owner, a contractor, and a surety company. If the contactor fails or refuses to fix any defects in warrantied materials or work, the surety company will pay for the damage. This way, the risk of the contractor performing shoddy or incomplete work is shifted from the property owner to the surety company. Of course, the surety company is compensated for this service. So, if you are considering using a warranty bond, be sure to work out payment terms in advance. In some jurisdictions, warranty bonds are underwritten by state agencies, so be sure to be aware of the rules that apply in your area. Warranty bonds help protect property owners against the risk of improper or defective construction by ensuring the work performed is up to the standards of a manufacturer’s warranty. Use this helpful interactive form to generate a warranty bond that suits your project’s requirements. A warranty bond can be a helpful tool for protecting your rights in a construction contract.

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