Bonds & Insurance
18% of this examWho is protected by which bond or policy, and what the surety does when a contractor defaults. The core skill is matching: performance bond → owner gets completion; payment bond → subs and suppliers get paid; builder's risk → the work itself; general liability → third parties.
Core concepts
The three bonds protect different people
A bid bond guarantees the bidder will sign and bond the job. A performance bond guarantees the owner that the work will be completed per the contract. A payment bond guarantees subcontractors, laborers, and suppliers will be paid — on bonded projects (and public property exempt from liens) they claim against the bond instead of liening (FS 713.23).
A bond is not insurance
A bond is a three-party guarantee: principal (contractor), obligee (owner), surety. The penal sum — commonly 100% of the contract price — is the cap on the surety's liability, and the surety expects the contractor to repay whatever it pays out.
Surety options after default
When the owner properly declares default, the performance bond surety may: take over and complete the work itself (takeover), tender a replacement contractor to the owner, finance the original contractor to finish, or pay the owner the cost to complete up to the penal sum.
Insurance matches the loss
Builder's risk: physical loss to the work under construction (fire, wind, vandalism). CGL: third-party bodily injury and property damage. Workers' comp: employee injuries. Additional insured status puts a sub's insurer behind the GC and owner for liability arising from the sub's work; a waiver of subrogation stops the property insurer from suing project participants for losses it covered.
Key facts to know cold
Where it lives in your books
The real exam is open book. Knowing which book — and which tab — answers this domain is worth as much as memorizing it.
AIA Documents
A201 article numbers are the map: Art. 3 contractor, Art. 7 changes, Art. 8 time, Art. 9 payments, Art. 11 insurance, Art. 12 corrections, Art. 14 termination, Art. 15 claims. Most Contract Admin questions cite one of these.
12 recommended tabs
Lien Law (FS 713)
Lien questions are deadline questions. Tab the deadline sections and answer from the statute, not from memory — one wrong number is the difference between a right and wrong answer.
9 recommended tabs
Contractor's Manual
This is your home base on exam day. Learn its table of contents — most candidates lose time flipping because they never learned which chapter holds which statute.
8 recommended tabs
Lookup strategy
- · Bond mechanics (penal sum, surety options, claim procedure) are in the A312 forms; insurance requirements and the subrogation waiver are A201 Article 11.
- · Payment-bond-instead-of-lien questions point to FS 713.23 — the bond exempts the property and routes claimants to the surety.
Reading isn't learning — retrieval is.
12 questions in this domain, each with an explanation and source.