What type of bond addresses additional legal, design, and delay costs if a contractor defaults?

The type of bond that addresses additional legal, design, and delay costs if a contractor defaults is the performance bond. A performance bond is a guarantee from a surety company to the project owner that the contractor will fulfill their contractual obligations. If the contractor fails to perform as stipulated in the contract, the surety company is responsible for compensating the project owner for the additional costs incurred, which may include hiring another contractor, covering delays, and any legal costs associated with the contractor’s default.

This bond is critical in construction projects to ensure that work is completed as expected and to protect against the financial loss that may arise from a contractor's failure to perform. By providing this safeguard, performance bonds encourage contractors to adhere to their contractual duties and manage their projects effectively.