What type of insurance policy ensures that a contractor will satisfactorily complete the work documented in a contract?

The type of insurance policy that ensures a contractor will satisfactorily complete the work documented in a contract is known as a performance bond. A performance bond is a guarantee provided by a surety company that the contractor will fulfill the obligations and complete the project as specified in the contract. If the contractor fails to complete the work or meets the terms of the contract, the surety company is responsible for compensating the project owner for any financial losses incurred due to the contractor's non-performance.

While there are other bonds that contractors may use, such as bid bonds and liability insurance, they do not specifically guarantee the completion of the work. Bid bonds are intended to ensure that a contractor will honor the terms of their proposal if awarded a contract, whereas liability insurance protects against claims resulting from damages or injuries sustained during the project but does not guarantee project completion.