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What is a Performance Bond?

 

Performance bonds are a form of insurance commonly used in the construction business. The bond protects customers from fraud, illegal or unethical activity, or failure to complete a construction project. If any of these things happen, the bond agency will then reimburse the customers, suppliers, and others who lost money in the project.

Performance bonds are usually purchased along with payments bonds.

Before contractors purchase a bond from an agency, they must submit themselves to a credit check, have their application approved, and go through other screening processes.

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