In this guide, we’ll explore what completion bonds are, how they differ from performance bonds, the parties involved, how claims work, and more. We’ll also share what information you need to apply for a completion bond successfully if you need one. 

In other words, we’ve got all your pressing questions covered! Read on to learn everything you need to know.

What is a completion bond in construction?

A completion bond holds a contractor accountable for completing a project they’ve agreed to complete. It guarantees the project owner that their contractor will complete the job regardless if they get paid.

In the construction industry, a completion bond ensures the project will reach the finish line. 

Parties Involved

  • The obligee: The party that requires the completion bond – this is typically a city, county, or state entity. Most of the time, it will not be the project owner. 
  • The contractor: The party responsible for completing the construction project on time and within budget.
  • The surety company: The party that issues the completion bond and guarantees that the contractor will complete the project.


If the contractor does not complete the project, the obligee can file a claim against the completion bond. The surety company will then investigate the claim and determine whether or not it’s valid. If it is, they will settle the claim on behalf of the contractor and then require 100% reimbursement.

Completion Bonds vs. Performance Bonds

If you’re familiar with construction bonds, you may wonder how a completion bond differs from a performance bond. They seem pretty similar, right? Here’s how to distinguish them:

  • As mentioned, a completion bond guarantees that a contractor will complete a project regardless if they get paid.
  • A performance bond guarantees that a contractor will perform the work specified in the contract.

Completion bonds are typically used when a new commercial or residential development is put up. The local municipality usually will require the contractor to post a completion bond, in the case the financing falls through. Then the city won’t have an eye-sore project in town for the next few years. Performance bonds are more commonly used on public bid projects.

When You Might Need a Completion Bond

These bonds are commonly used in various construction projects, such as:

  • Large-scale commercial buildings
  • Commercial developments
  • Residential developments
  • Industrial facilities

What information do I need to provide when I apply?

When applying for a completion bond, you will typically need to provide information such as:

  • Project details, including scope, timeline, and specifications
  • Financial information of the contractor, including credit history and references
  • Contractor’s experience and qualifications
  • Contract documents, including any relevant plans or specifications
  • Evidence that the financing on the job is in place

Why should you use a completion bond for construction?

Using this bond offers several benefits:

  • Protection for the project owner’s investment
  • Assurance of project completion as per contract terms
  • Mitigation of financial risks associated with contractor non-performance

Who purchases the completion bond?

A contractor is usually responsible for purchasing this bond when an obligee requires it at the start of a project.

When seeking a completion bond, consult a reputable surety bond provider to guide you through the application process and meet the requirements. By securing your bond today, you can embark on your construction endeavors with greater peace of mind.

Learn More About Completion Bonds or Apply Now

Working with a trusted surety provider before starting a construction project is essential. ZipBonds will ensure you have all the bonds you need to start and complete your next project. Our platform is the fastest and most secure option for getting the surety bonds you need. Apply on our website or call us at 888-435-4191 to speak with an agent!