One certain way for you to get the bonding process started and moving along quickly, is to be prepared to fulfill its requirements. Know this: Surety Bonds are not insurance; although issued by an insurance company, bonds are underwritten as a financial obligation. When you seek out the services of a surety bond agent, and prepare the documents they require, a part of your role in the process involves providing financial information from your business operations and personal financial statements from the business owner(s).
While a number of obligations on a contractor’s part are relieved toward the conclusion of a construction project, a construction owner’s concerns remain present. A contractor needs to provide assurance regarding the safety and upkeep of their work after the project is completed.
Say a corporation opts for a certain contractor-based project, accompanied by considerable costs and time limitations. What is to confirm that they will not face any troubles regarding these aspects from the contractors? Given the likelihood of incompetence and wrongdoing in high-risk projects, businesses are wary of hiring contractors.
Before the structural plans are drawn up, foundations set in or walls built, a construction project must comply with legal limits. When we take a property into consideration, the codes precede the construction. And by codes, we mean the codes guaranteed by a compliance bond.
People are quite skeptic about high-investment purchases. Property, insurance programs, vehicles – these are long-term contributions. A buyer needs assurance that the purchase is in their best interest. So it would not come as a surprise if we told you that that your reputation as an automobile dealer has to be well-founded to instill trust in potential customers.
A performance bond is issued to one party of a contract as a guarantee. If the other party fails to meet the obligations as specified in the contract, a claim can be made against the bond. Performance bonds are typically issued by individual surety companies, banks or even insurance companies. Performance bonds are usually provided in the real estate industry. They protect project managers from instances where poor quality materials are used or bad workmanship is practiced.
To better comprehend construction bonds, you first need to understand that the terms “construction bonds”, “contract bonds”, “performance, payment and maintenance bonds” even “statutory and defect bonds” are all referring to the same thing.
Although in reality contractor bonds are a type of license and permit bond, they’re typically confused and grouped with contract bonds. This is because they are used mostly in the construction industry.
You have just been asked to acquire a surety bond for a project and are left wondering ‘how do I do that?’ If you can relate to this, you are at the right place. At BondPro Inc, we get hundreds of emails every week from concerned contractors and project supervisors wondering how surety bonds work.
In most cases where it’s been days before you receive any quotes for surety bonds, the delay might be due to manual reviews. All applications naturally go through a review process before they can be approved. If your application goes for a manual review, it means that when your application was input into the computer, it wanted a second opinion.