What is a Surety Bond?

Definition and Benefits of Surety Bonds

A surety bond is simply an agreement between three parties:

• Principal: the person who needs the bond

• Obligee: the person who is protected by the bond, such as the government entity

• Surety: the person who issues the bond

Benefits:

• Relieves the project owner of risks of financial loss as a result of liens for unpaid subcontractors and suppliers. They also protect taxpayer money for public projects.

• The transition between the construction of the site and permanent financing is smooth because there are no liens.

• Surety company can offer assistance such as technical, managerial, and financial – to move the project along and reduce the chance of default (project failure).

• Surety company arranges for project completion if the contractor defaults.

Types of Surety Bonds

• Bid Bond – provides financial assurance that the bid has been submitted in good faith. The contractor intends to fulfill his/her responsibilities at the price bid and will provide the necessary performance and payment bonds.

• Performance Bond – protects the project owner from financial loss if the contractor fails to perform the duties outlined in the contract.

• Payment Bond – guarantees that the contractor will pay subcontractors and laborers, and for supplies relating to the project at hand.

Obtaining a Bond

Before a surety can provide assurance that a contractor can perform properly, they must go through the prequalification process. In this process, the surety conducts a review known as underwriting – analyzing the contractor’s business operations and determining their ability to meet current and future contractual obligations. The surety will not issue a bond until they are satisfied that the contractor can fulfill his/her contractual obligations. The surety looks at the items listed on the slide during the prequalification process.

Costs of Bonds

The charge for a bond, or the bond premium, is broken down as such: no charge for the bid bond, 0.5 to 2 percent of the contract amount for the performance bond, and no charge for the payment bond when purchased with the performance bond. In addition, there is a fee for surety’s underwriting services known as the surety bond premium.

Utilize these resources when receiving bids:

• U.S. Department of Treasury: www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm

• State Insurance Department: www.naic.org/state_web_map.htm

• Surety Information Office: http://sio.org or call 202-686-7463

Surety Bonds can be complicated.

Let Arnold Insurance Agency help you along the way!

614-863-0455

https://www.arnoldinsuranceagency.com/suretybonds

5 Tips to Prevent Tree Trouble

5 Tips to Prevent Tree Trouble

Trees are pretty amazing things. They produce oxygen. They serve as natural air conditioners, both by blocking sunlight and evaporation. They even absorb sounds, helping to keep things peaceful.

 These benefits, along with countless others, are great reasons to keep the trees on your property in good shape.  Looking for another?  Unhealthy trees can actually pose a great danger to your home and property, as well as to your family and other people.

 With these tips from the National Arbor Day Foundation, you can help prevent tree trouble – and potentially save yourself from a home insurance claim:

 1.       Inspect trees frequently. The size, color, and condition of leaves, and overall leaf cover, are good indicators of a tree’s health. Cavities or disfiguration can be a warning sign, although they don’t always mean a tree is a hazard. Just keep a close eye on it. Dead branches are a big risk because they can fall easily. Those that cross or rub can create weak spots. 

2.       Plant in an appropriate space. Putting in a tree that will grow to be large? Don’t put it near power or sewer lines, or close to your home. And avoid brittle trees – their limbs are weak and more likely to break and fall. Examples include Silver Maples and Willows.

3.       Prune correctly. Cut outside the branch collar, and prune regularly as trees age. Don’t allow a tree to be topped.

4.       Leave it to an expert. Once a year, have a qualified arborist thoroughly evaluate the trees on your property. An arborist can identify ones that need to come down immediately, as well as those to watch. In particular, trees that have been topped, or that have lost large limbs unexpectedly, could cause trouble. Taking down trees can be very dangerous, so leave it to a professional.

5.       Remember, you’re responsible. Property owners are generally responsible when their hazardous trees cause damage or injury to others. So keep your trees healthy, your space beautiful and your liability low!

 When a tree does fall, you may or may not have coverage through your homeowner’s policy for any damage it may cause. If you’d like to discuss your coverage, please contact us today. It may be a good time to think about adding extra liability coverage to your insurance portfolio with an umbrella policy.