What Does Completion Bond Mean?
A completion bond is a guarantee in the form of a surety bond contract that a given project will reach completion. This means that even if something goes wrong or original financing is removed for some reason, the project will still be completed. Completion bonds are similar to insurance in that they provide protection from specific financial risks.
Insuranceopedia Explains Completion Bond
Completion bonds are often required in large scale construction or movie projects. This is because these projects can take many months or even years to be completed, and without the bond, the potential risks could be too high for investors to risk their money.
For example, a movie studio might offer a completion bond to investors looking to help finance the production of a movie. Once the investor has the guarantee of a completion bond, they have a way to recuperate their losses in case the movie never reaches completion and are more likely to trust that the studio would complete it.