Within the construction industry, surety bonds are a daily event, they are almost a mandatory part of every major construction project. These bonds protect the owners of the projects against default, poor workmanship and many other unforeseen circumstances.
There are a number of different surety bonds that are taken out, they all cover different needs and provide additional layers of protection. Good examples are bid bonds and payment/performance bonds. In the case of the bid bond this ensures that the winning bidder can handle the project, payment and performance bonds provide a guarantee to the sub contractors that they will be paid and the contract is followed exactly.
The primary sources for surety bonds are insurance companies. It is up to the contractor who is bidding on the job to secure the bond and choosing the right company to provide the surety is very important.
Here are a few tips aimed at contractors to help them get the right surety company.
Only work with pros: Professional surety companies will have a full understanding of your needs. A professional surety company have stringent requirements for underwriting, this in itself can help the contractor better understand his own capabilities.
The law: Find a surety company that has a broad based understanding of the construction business. They must understand contract law as it applies to your area.
Track record: Investigate the reputation and background of the surety; look for a surety that has a record of working with reputable and legitimate companies. Surety companies are regulated by the state insurance department, check with them as well as industry groups to gain deeper insight into the surety.
Credit and underwriting: Look for a surety company that makes its standards clear and easy to understand. The surety will dig deeply into the financial records of the company and the owner as well as many more fiscal indicators while the application is be evaluated, look for a company that follows the guides of the Institute of CPAs.
Affiliations: Look for a surety that has affiliations with industry groups such as The Surety & Fidelity Association which represent many thousands of surety agents and brokers.
And lastly, trust your instincts. As surety bonds are a significant investment, even there is even the slightest doubt on your part about the company’s willingness to work with you, move on.
Surety bonds for any reason are available from BuySurety.com. Contact Buy Surety and let them offer a quotation that will exceed your expectations.
