Other Contract
Advance Payment Bond
An advance payment bond guarantees that a contractor or supplier who receives money up front will repay it if it does not deliver the work or goods.
- Required by
- Project owners and buyers that pay before work or delivery
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The owner or buyer who makes the advance payment is the obligee. If the contractor defaults or becomes insolvent before the advance has been earned through work, the surety repays the unearned part of the advance. The bond amount usually equals the advance and may reduce as work is done.
Who needs it
- Contractors receiving mobilization or deposit payments
- Suppliers of custom equipment paid in advance
- Contractors on international or design-build projects
What the underwriter looks at
- Size of the advance
- Contractor's financial statements
- How the advance will be used and earned
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
How is this different from a performance bond?
A performance bond guarantees completion of the whole contract. An advance payment bond guarantees only that unearned advance money comes back if the contractor defaults.