A maintenance bond, also called a warranty bond, protects project owners after construction is complete. It guarantees that the contractor will repair defects in workmanship or materials discovered during the specified warranty period, usually one to two years after project acceptance.
Owners rely on maintenance bonds to protect long-term investments after the project is handed over. For contractors, providing maintenance security is often a condition of final payment and shows confidence in the quality of completed work.
Maintenance bonds we usually issue are typically 10% to 20% of the original contract value and cover the warranty period. Premium rates are usually lower than performance bond rates because the risk window is more defined and the work is already complete.
For most qualified contractors, maintenance bond premiums range from 0.5% to 1.5% of the bond amount. For a $1,000,000 project with a $150,000 maintenance bond, the premium would typically range from $750 to $2,250.
Many performance bonds include a one-year maintenance provision as a standard feature, which covers warranty obligations without a separate bond. When this provision is not included, or when the owner requires an extended warranty period, a standalone maintenance bond is required.
Review your contract carefully before assuming the performance bond covers post-completion warranty obligations. Your surety can advise on whether a separate maintenance bond is needed.
A maintenance bond guarantees that a contractor will repair defects in workmanship or materials during a specified warranty period after project completion.
Yes, the terms are interchangeable. Both refer to a surety bond that protects owners against defects discovered after project handover.
Most maintenance bonds run one to two years, aligned with the warranty period specified in the contract. Some infrastructure projects require longer periods.
Many performance bonds include a one-year maintenance provision. If yours does not, or if the contract requires a longer warranty, a standalone maintenance bond is needed. Review your contract language carefully.
