What are warranty bonds? Ultimate Guide

A builder’s warranty is a type of surety bond that protects the owner of an unfinished construction project for a specified time period against faults and defects in workmanship, materials, or design. These bonds are sometimes called maintenance bonds because they provide funds to cover any shortfalls if there are damages later on from not finishing correctly.

What is the Cost of a Warranty Bond?

It is normal for a warranty bond to cost somewhere between One Percent (1%) and Three Percent (3%) of the total amount of the contract. Some sureties bill this on an annual basis while others charge a slightly higher amount in the first year to cover all remaining years.

What’s the Reason behind a Warranty Bond?

A warranty bond is a legal document that guarantees to the project owner that if there are any issues with their work or materials, they will come back and fix it for you. It’s like insurance on your home repairs!

Who Purchases the Warranty Bond?

The person issuing the bond is called the “principal.” The principal assumes responsibility for any claims filed by whoever they are guaranteeing. The principal’s responsibility to pay for any claims filed by the Obligee is an important aspect of a surety bond. When people purchase these bonds, they are acting as principals and will be taking on all costs associated with it if necessary, including paying out compensations in accordance with state laws.

What are Maintenance Bonds in Construction?

Construction maintenance bonds protect the owner of completed construction projects from future defects and errors caused by poor craftsmanship and poor materials. Surety bonds are frequently used by contractors to secure work.

What’s the difference between a Warranty and a Guarantee?


It’s a promise that things will be or turn out the way you want. A guarantee is an assurance, and they can come in many forms: from words on paper to promises made with your hand over someone else’s heart.

It’s every child who has ever been told not to worry because their parents are always there for them; it’s all of us at one point telling ourselves tomorrow couldn’t possibly get any worse so we’ll just focus on today-thereby getting through this day before worrying about what might happen next week. But most importantly, guarantees give people something solid to hold onto when life is unpredictable – symbolic proof that everything really does work itself out eventually if only you allow it enough time


What are Construction Warranty Bonds? A warranty assures the integrity of a product and the producer’s responsibility for it. Warranty is an example of a more specific (and legal, i.e. written) term. In this sense, guarantee is the general term.

Do Performance Bonds Cover the Warranty Time?

The surety company is also responsible for this one-year agreement, as Performance & Payment Bonds comply with the contract. These costs for contract performance & payment bonds are already included in the premium rates of bonding.

How Do Warranty Bonds Actually Work?

Owners of construction projects benefit from warranty bonds by protecting themselves from poor craftsmanship and substandard materials. The use of warranty bonds is not only mandated for state projects but can also be required for private construction projects.

In other words, bonds serve as a contract between a principal, an Obligee, and a surety company. Contractors can be sued by project owners when they fail to meet their expectations. Upon confirmation of a claim, the surety is obligated to compensate the obliges for the losses incurred. It is just as important to avoid any chances of claims for contractors who have had claims made against their bonds, as they will be required to repay the sureties later on.


A builder’s performance warranty bond is a surety bond that protects the owner of an unfinished construction project for any faults or defects in workmanship, materials, and design. These bonds are sometimes called maintenance bonds because they provide funds to cover shortfalls if damages occur later on from not finishing correctly- with your money.

About Ambika Taylor

Myself Ambika Taylor. I am admin of For any business query, you can contact me at [email protected]