Utah Contractor Practice Exam

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What does a construction bond typically protect against?

Project delays
Financial loss for the contractor
Non-payment to subcontractors
Worker injuries on site

The correct answer is: Non-payment to subcontractors

A construction bond serves primarily to ensure that a contractor meets their obligations according to the terms of the contract. This includes the responsibility to pay subcontractors and suppliers working on the project. When a contractor fails to make these payments, the bond provides financial protection to the affected parties. Essentially, the bond guarantees that funds will be available to cover unpaid bills, which helps maintain financial stability and promotes trust in the construction process. Project delays, financial loss for the contractor, and worker injuries on site are not directly addressed by a construction bond. While delays may impact project completion and financial outcomes, they are usually managed through different avenues such as liquidated damages or contract stipulations. Worker injuries are typically covered under workers' compensation insurance rather than a construction bond. Thus, the primary focus of a construction bond is to protect against non-payment issues, making it a crucial element of the financial security framework in the construction industry.