Our Surety Bonds....
What's a Surety Bond?
A Surety Bond is a bond issued by an entity on behalf of
a second party, guaranteeing that the second party will
fulfill an obligation or series of obligations to a
third party. In the event that the obligations are not
met, the third party will recover its losses via the
bond. Typically, the parties involved are a Surety,
Contractor and Project Owner. If the Contractor fails to
perform their contractual obligations then the Project
Owner is protected through the Surety.
Types of Bonds?
- Bid - This bond assures that the bid
has been submitted in good faith and
that the contractor will enter into the
contract at the price bid and provide
the required performance and payment
bonds.
- Payment - This bond assures that the
contractor will pay specified
subcontractors, laborers, and material
suppliers on the project.
- Performance - This bond protects the
owner from financial loss should the
contractor fail to perform the contract
in accordance with its terms and
conditions.
- Ancillary - This type of bond
includes other types of issues that are
incidental and vital to the performance
of the contract.
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Benefits of Bonds?
Surety Bonds protect Project Owners,
Lenders, Taxpayers, Contractors, and
Subcontractors for numerous reasons
including, but not limited to, the
following...
- The contractor has undergone a
rigorous pre qualification process and
is judged capable of fulfilling the
obligations of the contract.
- Contractors are more likely to
complete bonded projects than non-bonded
projects since the surety company may
require personal or corporate indemnity
from the contractor.
- Subcontractors have no need to file
mechanics' liens on the project when a
payment bond is in place.
- Bonding capacity can help a
contractor or subcontractor grow by
increasing project opportunities and
reap the benefits of the assistance and
advice of the surety bond producer and
underwriter.
- Surety companies may prevent default
by offering technical, financial, or
management assistance to a contractor.
- The surety company fulfills the
contract in the event of contractor
default.
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Any contractor - whether in business for one year or
100, large or small, experienced or novice - can
experience serious problems. Through the years surety
bonds have held fast as a comprehensive and reliable
instrument for minimizing the risks in construction. |
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