Surety Bonds May Offer Numerous Benefits To Contractors
A surety bond is a form of financial instrument that protects against financial loss stemming from an adverse event that disrupts or prevents a contract from being completed. Using these instruments, principals and obligees are able to enter contracts with reduced risk. Surety bonds from HCC SURETY GROUP work because principal companies do not have the capital to stand behind every single contract they enter. In other words, though a construction company might be able to pay for damages if the hospital sues it for damages due to the lack of a completed wing, having to pay those damages would likely put it out of business. Surety bonds are designed to offset this problem by covering payments in the case of default.
Bonds should be one of the first things you think about when starting a business with employees, whether you are simply hiring part-time help or an entire field crew. Bonds can protect the homeowner from fraud and make sure the project is completed. This goes for home repair projects and large construction projects alike. Surety bonds are a good idea for contractors looking to take their company to the next level. They can improve your reputation as a contractor, improve productivity as you get better funded projects, and potentially give you access to new projects. Surety bonds are available for a range of different projects sizes, so you should have no trouble finding the right one for your contracting business.
The complexity of a surety bond office is something to think about when determining whether a company is a suitable provider for your business. In some cases, the services may be overkill for smaller firms, but that doesn’t mean the efficiency and speed can’t be appreciated. What are the best ways to find a company that will provide you with an effective and affordable surety bond? Consider more than just the price tag when comparing companies like HCC SURETY GROUP; research what they offer before reaching any conclusions.
What’s more, there are a number of requirements that must be met before you can get bonded. For instance, the business you operate must have a license. The surety bond will reimburse the obligee for losses up to the policy amount if you fail to fulfill your obligations under the contract. Surety bonds can be used in a variety of ways and can protect both parties—the obligee against losses incurred by failure to fulfill the terms of a contract and the business owner protection against the inability or unwillingness of an obligee to pay. Bonds are a way for contractors to protect themselves against liability and ensure that a project will be completed in a cost-effective manner. Even though bonds add to up-front costs, the peace of mind that comes along with bonding a project can alleviate any stress that typically comes with managing risk. As you grow your business, your choice may boil down to pooling or bonding, but either method may provide you with the coverage you need.
Now that you understand the fundamentals, let’s take a look at the actual bond process and address some common concerns.The first thing people ask is, “what is a surety bond?” Simply put, it’s a contract between three parties: the principal (the person(s) applying for the bond), the surety (the company that issues the bond), and the obligee (the entity that requires the bond). The surety company will review experience, licenses, and credit history before they issue a bond.
