Policy snapshot
A bond provided in lieu of cash retention (usually 5–10%) that guarantees the contractor will fulfill post-completion obligations.
What is Retention Bond?
Retention Bonds allow contractors to receive full payment during the project while still giving the project owner financial assurance of quality and compliance.
What can it cover?
- The bond guarantees that the contractor will fulfill post-completion and quality obligations. If they fail, the insurer pays the retained amount to the owner. It substitutes retention money while securing compliance.
Who should consider it?
- Contractors executing high-value or cash-strapped projects, Firms facing tight working capital cycles, Projects where retention deduction is contractually required.
Key features to understand
- Replaces retention money deducted from progress payments
- Improves cash flow for contractors
- Valid until completion + defect liability period
What deserves attention before you buy?
Coverage, exclusions, sub-limits, deductibles, waiting periods, warranties and underwriting can vary between insurers and policy versions. The policy wording and schedule remain the definitive contract. Novo can help you review the relevant terms for your requirement.
Read the wording, not just the brochure
The schedule and policy wording determine the actual contract.
Compare meaningful differences
Look at exclusions, limits, deductibles, conditions and claim requirements—not premium alone.
Think beyond purchase
Servicing and claims-related support can matter as much as placement.