Supply Bond

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Supply Bond Definition: What is It and Why Do You Need One?

A supply bond is a type of construction bond that guarantees you will deliver all materials specified in a given contract, and you are required to obtain a bond for working on public jobs to protect the public.

If you do not deliver the materials and goods according to the contract, a claim can be filed on the bond. If you would like to learn more about what surety bonds are and how they work, you can read our detailed guide here.

How Much Does a Supply Bond Cost?

Costs are a small percentage of the bond amount, and vary by applicant (financial strength, industry experience, etc.).

Frequently Asked Questions

Where can I get a supply bond form?

We have the standard AIA supply bond forms on file which most obligees use. The obligee may have their own special bond form with their own bond language; in which case you need to obtain it from them.

Can I get a bond for a new business?

Yes. We have credit based programs available for smaller contracts which allow new businesses to obtain contract bonding. However, this is not possible for larger contracts unless the owner(s) have substantial equity within the company and an impressive resume of past experience.

Will the supply bond guarantee installation?

No. They specifically exclude the guarantee of any installation. They only guarantee the supply of materials and goods.

I also need a performance bond. Do I need a separate application?

Only if you need a standalone supply bond. You do not need a separate application if it is required alongside a performance and payment bond.

Why do you look at my personal credit?

To determine your likelihood of triggering claims and your ability to pay them. This is important, as surety bonds are a form of credit to you, not insurance. Sureties will look to you for reimbursement on any legitimate claims.

What if a false claim is filed?

You must contact us immediately, as we have a team of claim specialists here to find a resolution for you. Keep in mind, it is crucial that you work with an expert in the surety industry. Learn more about how to ensure you choose the proper bond company.

Are you looking for a different type of bond?

You can take a look at our full list of contract bonds.

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