 When working in construction, having surety bonds in place will not only provide credibility for your firm, but also help customers feel at ease. There are a number of surety bonds for construction-related projects, which can provide various benefits to both the customers and business.
What is a Surety Bond?
A surety bond is a promise by the surety company to pay the obligee (usually the person requiring the bond) a certain amount if the principal fails to meet their contracted obligation. Although private entities can require them, they're often used by local, state and federal governments (including school districts) on improvement and/or maintenance contracts usually above a certain dollar amount. If the principal defaults, the surety company can obtain another contractor to finish the project, or can compensate the owner for any losses incurred.
These are the types of surety bonds in construction:
- Bid Bond: This type of bond ensures the bidder will fulfill his duty to enter the contract and furnish the required payment and performance bonds.
- Performance Bond: This type of bond ensures the contract will be performed in accordance to the terms and conditions of the contract.
- Payment Bond: This type of bond ensures the subcontractors and suppliers who performed work under the contract are paid.
These are the types of surety bonds in construction that work to your benefit as a project owner. For more information on construction surety bonds, contact your insurance agent today.
We'll help you get started. Call Southwest Commercial Insurance at (512) 771-6091 today to learn more about the surety bond options we offer.
Posted Wednesday, February 17 2016 3:00 PM
Tags : surety bonds, bonds, construction insurance, construction, bid bond, performance bond, payment bond, insurance, business insurance, Southwest Commercial Insurance
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