Utah Contractor Practice Exam

Which of the following is typically not included in a performance bond?

1. Completion of the job

2. Payment for materials

3. Payment for labor

4. Insurance for the contractor's negligence

The correct answer is: Insurance for the contractor's negligence

A performance bond is a type of surety bond that ensures a contractor completes their project according to the contract terms and conditions. It is primarily designed to protect the project owner from financial loss in the event that the contractor fails to fulfill their obligations. Typically, a performance bond covers the completion of the job and guarantees that the contractor will pay for materials and labor necessary to complete the project. This means that if the contractor defaults, the surety company will step in to fulfill those obligations, ensuring that the project is finished and that suppliers and laborers are compensated. On the other hand, insurance for the contractor's negligence is not covered by a performance bond. This aspect falls under liability or negligence insurance, which protects the contractor from claims resulting from accidents or errors made during the performance of their work. Thus, the contractor's negligence or any liabilities arising from it are addressed through separate insurance policies, not through the performance bond itself.