A Charlotte maintenance bond is a guarantee on the upkeep of a project for a specified amount of time after the project has been completed. It essentially states that the work has been done properly and to code and no problems will occur due to the construction of the project during the “maintenance term.” If problems do occur, claim can be filed by the project owner.
How Maintenance Bonds Work
In Charlotte, and all throughout North Carolina, a maintenance bond guarantees the quality of the work you’ve done. When you have this bond, you promise to complete the work in accordance with construction standards, building codes at the local, country, and state level, and state regulations. Maintenance bonds are required on all public projects, at the state and federal level. Some private companies may require them before awarding a job, as well.
Think of a maintenance bond like a warranty on your work. This bond will only be in effect for a specified term, and the project owner can only file a claim during the maintenance term. Maintenance terms are determined when the bond is written and may be 12, 18, or 24 months long.
Applying for a Maintenance Bond
Like other bonds, a surety will need specific information to determine whether to write the bond or not.
- Total cost of the initial contract
- Your personal credit score
- Financial information related to your business
The total cost of the maintenance bond -- your premium -- will be dictated in large part on your personal credit score. The higher your credit score, the lower your premium. For qualified contractors with high credit scores, your maintenance bond premium will be between one and four percent of the total bond. If your maintenance bond is worth $50,000, this means your premium would be between $500 and $2000.
Maintenance Bond Claims
Once the project is completed, the maintenance bond will be in effect for the term agreed upon in the bond. During that time, if the project owner finds that your work was unsatisfactory or there are other problems, they can file a claim against the bond. The surety will investigate the claim. If the claim is found to be valid, the project owner will be compensated for their damages and financial losses. You will be required to repay the surety as outlined in the original bond.
A Charlotte maintenance bond, beyond being required to win the job, is an additional layer of protection for everyone involved in the job. If you suspect that a claim could be filed, work with your surety company to resolve the issue before a claim is filed. This will save you money and time in the end.
When you need a maintenance bond or any other surety bond, contact Charlotte Insurance. We’ll walk you through the process and get an estimate to find your the best price for your maintenance bond.