To run your business, you need guarantees for contracts and other financial obligations. A surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).
Failure to complete a project coverage
A contractor might start a project but fail to complete it due to some reasons.
Surety bonds can be taken to guarantee that an insurance company will reimburse your client when your business fails to complete a project or fulfil a contract.
License / permit requirements coverage
You may need a valid license or permit to apply for a particular project which can only be taken you get your license.
If you have surety bonds, you can get your license / permit on its security.
Failure to meet standards / regulations coverage
A contractor might get booked for not meeting the standards of his work as promised.
Surety bonds can be taken to guarantee that an insurance company will reimburse your client when your business fails to meet its standards.
Employee theft coverage
If any of your worker / employee steals anything on the construction site, you may suffer a loss.
Surety bonds can be taken to reimburse the loss when your employee does something like this while on work.
The surety bond provides a guarantee to the obligee that the principal will conduct themselves per the terms outlined in the surety bond.
Surety bonds are legally binding contracts that ensure obligations will be met between three parties:
There are two main categories of surety bond:
Contract Bonds
Commercial Bonds.
Contract bonds guarantee a specific contract. Examples include Performance Bonds, Bid Bonds, Supply bonds, Maintenance Bonds and Subdivision Bonds. Commercial Bonds guarantee per the terms of the bond form..
Surety bonds are typically required for contractors who seek to work on government contracts. They are also required for persons and companies that are licensed by a governmental entity. Even when not compulsory, surety bonds make sense when a contract requires performance, because they help compensate obligees when principals fail to meet their contractual obligations. They do not make sense if the amount of possible damages is negligible.
Talk to us to know more.
It might be time to switch insurers whenever the service that your existing insurer provides doesn’t meet your needs. For example, if you have a poor claims experience or an unexplained rate increase, it might be time to consider other options
If you cancel a previous policy before a new policy is effective, you could run into some serious financial problems.
Contact us today to help you with multiple options to choose from.