What type of bond helps reduce the general contractor's risk?

Subcontractor bonds are designed to protect the general contractor from the risk associated with subcontractors not fulfilling their obligations. When a general contractor hires subcontractors to complete parts of a project, there is an inherent risk that these subcontractors may fail to meet their contractual responsibilities, such as completing work safely, on time, or in accordance with the established quality standards.

A subcontractor bond ensures that if a subcontractor defaults or fails to perform their duties as specified in the contract, the bond provides financial coverage to the general contractor. This means that the general contractor can recover losses or secure funds to hire another subcontractor to complete the work. This protective measure reduces financial exposure and enhances the overall security of the project, allowing the general contractor to manage risk more effectively.

The other bond types serve different purposes: license bonds ensure that contractors comply with local regulations; bid bonds provide a guarantee that a contractor will accept a project if awarded; and lien bonds help resolve disputes related to liens placed on property due to unpaid work. While these bonds also play significant roles in a construction project, they do not directly address the specific risk posed by the actions of subcontractors.