What type of bond is used to guarantee the completion of a project when required?

A performance bond is specifically designed to guarantee that a contractor will fulfill their obligations under a construction contract. This bond assures the owner of the project that the work will be completed according to the agreed specifications, within a designated timeframe, and that all terms of the contract will be adhered to. If the contractor fails to complete the project as required, the performance bond provides financial compensation to the project owner, allowing them to seek out another contractor to finish the work.

In contrast, a bid bond secures the owner against a bidder's failure to follow through on their proposal after being awarded the contract. A payment bond ensures that subcontractors and suppliers will be paid for their work and materials, preventing lien issues. An insurance bond, while it can cover a range of liabilities, is not primarily focused on guaranteeing project completion. Therefore, the performance bond is the correct choice to ensure that the project is completed as per the terms of the contract.