A Building, Mechanical, and Electrical Contractor bond is designed to protect cities, states, and individuals who are harmed as a result of the principal’s noncompliance from financial loss up to the full amount of the bond. The principal must reimburse the surety for all damages paid out. In some municipalities, it is required in order to perform duties for a local or state government. The bond ensures that the contractor will abide by all local and state ordinances. If a contractor fails to execute his or her duties as agreed, they are liable to pay restitution. Contractors who are backed by a bond are preferable to many municipalities.