Which type of bond is specifically designed to protect against project non-completion?

A performance bond is specifically designed to protect against project non-completion. This type of bond is executed by a contractor and a surety to guarantee the completion of a project according to the contractual terms. If the contractor fails to complete the project, the surety can step in to either ensure the project is finished or provide financial compensation to the project owner.

This bond is essential for project owners because it mitigates the risk of financial loss due to a contractor’s inability to fulfill their obligations. It also helps to ensure that the project will be completed to the standards and timelines specified in the contract. Performance bonds are commonly required in construction contracts as a safeguard against potential failures by the contractor.

In contrast, a surety bond is a general term that can refer to various types of bonds within surety agreements. A payment bond ensures that subcontractors and suppliers are paid for their work and materials, while a bid bond provides a guarantee that a contractor will honor their bid if awarded the contract. Since none of these other bond types specifically address the issue of non-completion of the project as directly as a performance bond does, the performance bond is indeed the correct choice for protecting against project non-completion.