Why are Surety Bonds Important?
Surety bonds are the oldest form of insurance. There are three types of surety bonds. The bid bond, the performance bond, and the payment bond. A surety bond is usually a binding contract between three parties. These are the contractor, the surety company, and the project owner.
It goes a long way to ensure that a construction is finished without a problem as per the construction agreement. It guarantees that even if the construction company does not deliver, the surety company will ensure construction is completed according to the agreement between them. Many of us will wonder why we need a surety bond.
It is a requirement
You cannot bid on a job especially a public contract without providing a surety bond. This gives the project owner a sense of security in case anything goes wrong on the job. It also goes a long way in showing the project owner that a certain surety company has reviewed you and find you worthy of the given contract.
Guarantee that work will be done
For the project owners surety bonds are an assurance that the job will be well done and to the specific details, he provided. They enjoy an assurance that the job will be done on time too, despite whatever setbacks occur during the construction period.
Unlike general insurers who handle different types of insurance cases every day, surety companies come with some sense of specialty since they only deal with this specific kind of insurance every day. Surety bonds go a long way to ensure you get financial aptitude and competency on the work done on your project.
Lower the cost of operation
By virtue of getting more than one bid to choose from, most of the time surety bonds give room to choose contractors who offer more affordable services. The project owner is also relieved from the temptation and possibility of using project funds for other needs.
Considering the volatile nature of the construction company, the importance of surety bonds is invaluable for both the project owner and the contractor. If you are a contractor, you might be wondering, “what is a contractor bond”. Contractor bonds are a type of surety bond that fall under the license and permit bon category. If you are a licensed contractor, it is imperative to maintain a status of being boned in order to continue to get work and keep employment.
Surety bonds are an important aspect in most industries. Check out NFPSurety.com and get yours today.