From large global general contractors to local trade contractors, construction bonds serve as protection for owners and general contractors from defaults. Provide the assurances necessary for construction projects, contracts and their subsequent obligations, both large and small. Equipped with industry expertise, the facilitation of sureties' relationships and decades of knowledge, Gallagher offers contract surety bonds tailored for your needs.
We help advise you on key issues including indemnity, rates, capacity and business continuity planning. Through our underwriting and brokerage experience, we offer surety bonds for contractors that provide a guarantee for the performance and payment obligations of your next construction project.
Contract surety bonds customized for your construction business
Gallagher is helping bridge the gap between contractors and project owners while minimizing the risks for all parties. Through our contract surety bond expertise, we can help meet any and all of your needs. Our construction surety expertise includes:
- Strong surety market leverage and reach as we have relationships with all major surety markets.
- A global network that helps us in assisting clients with due diligence on subcontractors, owners and general local knowledge.
- Comprehensive knowledge to assist clients on maximizing their surety support.
- Extensive expertise in co-sureties and joint ventures.
Types of construction bonds
We work alongside every type of contractor from home builders to general contractors within your community -- to highway and civil contractors to international general contractors. From private construction development to public works projects, our expertise in contract surety bonds keeps all parties protected. Examples of contract surety bonds are:
- Bid bonds– Guaranteed if the principal (contractor) is a low bidder and awarded the job, he/she/they will enter into a contract and provide the necessary performance and payment bonds.
- Performance bonds– The surety entity is obligated to the oblige to ensure performance of the contract in accordance with the contract terms and specifications.
- Payment bonds– Also known as labor and material bonds, these guarantee that the payments due to qualified claimants, in connection with work performed under the contract, will be paid as committed.
- Maintenance bonds– Also known as a warranty bond, this type of surety bond purchased by a contractor that protects the owner of a completed construction project for a specified time period against defects and faults in materials, workmanship, and design that could arise later if the project was done incorrectly.
Navigating the complexities of projects with contract surety
Construction bonds (also known as contract surety bonds) are essential for contractors to help ensure the completion of your construction project. While surety bonds are written by insurance companies, they are not considered traditional insurance. Surety bonds are three-party agreements in which the surety guarantees the performance of the principal to the oblige. The surety does not assume the primary obligation, as any losses are to be repaid by the bonded contractor. While the two may seem similar, below is a list of a few differences between construction bonds and insurance policies:
| Construction Bonds | Insurance Policies |
| Construction only | For different types of businesses and organizations |
| Three-party agreement: the principal, surety and oblige | Two-party agreement: the insured and the insurance company |
| Coverage is specific to each project | Coverage is term specific and renewable |
| Coverage is 100% of the contract price for performance and payment | Coverage up to policy limits |
| Surety can contract balance and indemnity from contractor for the associated claim costs | No rights to insured's assets |
| Bonds are required for public works and optional for private | Insurance serves optional coverage to help businesses mitigate risks |
| Not cancelable | Can be canceled |
For projects that are privately funded, construction bonds create a smooth transition from financing pre-build to permanent financing. For public projects, construction bonds support contractors' prequalification, payment protection for subcontractors and contract completion protection. Gallagher is here to ensure your contract surety supports your business plan, not the other way around.
Build a new future with Gallagher
Construction bonds serve as dependable protection against contractor failure. Gallagher works not only to facilitate, execute, and process your construction bond, but to also enhance the relationships with your surety carriers. As one of the largest construction-focused brokerages in the world, Gallagher will help your construction business face the future with confidence.