Maintenance Bonds
A Maintenance Bond is a type of contract surety bond that guarantees completed construction work will be free from defects in workmanship and materials for a specified period after project completion—typically one year. Sometimes referred to as a warranty bond or construction bond, a maintenance bond ensures the contractor’s work meets contract terms, local building codes, and regulatory requirements. While maintenance guarantees are often included within performance bonds, maintenance bonds can also be issued separately to provide post-completion protection. If defects arise during the maintenance period and the contractor fails to correct them, the project owner may file a claim against the bond to cover repair costs.
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Why You Need a Maintenance Bond
Maintenance Bonds are important because they:
- Protect project owners from defective work
- Ensure post-completion repairs are completed
- Provide financial assurance during the warranty period
- Demonstrate contractor reliability and quality
- Reduce long-term project risk
Without a Maintenance Bond, project owners may have limited recourse if defects appear after completion.
Maintenance Bond FAQs
These are some of the most common questions asked about Maintenance Bonds and how they work.
A Maintenance Bond (also called a warranty bond or defect bond) provides assurance that a contractor will correct defects in workmanship or materials discovered during the maintenance period. This bond is commonly required on public works and private construction projects after final completion.
If the contractor fails to honor the warranty, the project owner may file a claim against the bond to cover repair costs.
Maintenance Bond premiums are generally 1%–3% of the bond amount, depending on:
Bond amount required
Length of the maintenance period
Contractor’s credit and financial strength
Project scope and complexity
For example, a $100,000 Maintenance Bond may cost between $1,000 and $3,000.
Maintenance Bonds involve three parties:
Principal: The contractor
Obligee: The project owner or public entity
Surety: The bonding company
If defects in workmanship or materials arise during the maintenance period and the contractor does not correct them, the obligee may file a claim. The surety investigates and pays valid claims, and the contractor must reimburse the surety.
Medicaid Provider Bonds are commonly required for:
- Home health agencies
- Durable medical equipment (DME) suppliers
- Transportation providers
- Behavioral health providers
- Any Medicaid provider required by state or federal regulation
Bond requirements vary by state and provider type. Some providers are required to post a bond as a condition of enrollment, revalidation, or reinstatement.
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