You are here: Home / Archives for Surety Bonds

Understanding Surety Bonds

July 6, 2012 By

surety bond creates client trust

Surety bonds can help generate trust between you and your clients. Call Statewide Insurance Brokers for more information.

You may be a construction industry veteran, but it’s quite possible that you are one of the many construction professionals who doesn’t completely “get” surety bonds.  As a recent article in Construction Digital online reports, “understanding of [surety bonds] is…surprisingly limited”: moreover, the lack of full comprehension extends to the very contractors who use them.

Surety bonds are important to the construction industry because they bring the three key entities into a legally binding contract. These entities include:

  •  the principal or contractor who buys surety bonds to guarantee his/her work
  • the obligee or project owner/government agency that needs the bonds to protect against financial loss
  • the surety or company that issues the bond and serves as a mediator between the principal and the obligee

In the event a contractor doesn’t meet the terms of a bond, the affected parties can then “make a claim on the bond to gain reparation.” The bond issuer will typically require that a contractor “provide reimbursement according to the bond’s indemnity agreement.”

Bonding also ensures that the bidding process is transparent. When a contractor initially bids for a project, he or she will typically offer bid bonds which guarantee that the contractor “will complete a job for the initial bid without raising the cost.” This encourages bidding from financially stable companies while assuring project owners that they can file a claim to recover any losses incurred from potential price gouging.

Most importantly of all, however, construction bonds “reinforce client trust.” When project owners work with a bonded construction professional, they can rest assured that the contractor has a good reputation and that they will be protected against damages. This is because surety bond providers “conduct thorough background checks”  on all  individuals who seek bonding.

Your clients depend on you. That’s why Statewide Insurance offers information about bonding and surety companies when you need it most: we’re the brokers you can rely on to help make your business a safe bet for success.

For more information about Statewide Insurance Brokers Surety Bonds, call 888-258-0272.

California to Toughen Up Surety Bond Regulations for Trucking Brokers

May 9, 2012 By

In California, the California Senate is bringing in stronger legislation to ensure that construction truck operators are protected from unscrupulous brokers who do not comply with surety bond regulations.

Since January 2011, California law has required that a broker of construction trucking services post a surety bond to ensure payment to a dump truck operator whose services were brokered. The driver is also required to provide certification of his operator’s permit to the broker.

The brokers must secure a surety bond of at least $15,000 to ensure payment for the operators and the failure to do so is a misdemeanor and could result in up to a $5,000 fine.

The new legislation before the Senate Transportation and Housing Committee would require construction trucking brokers to disclose a copy of their surety bond.

Sen. Kevin de Leon, D-Los Angeles, told panel members that the change that would improve transparency in notification requirements.

“There still are very unscrupulous brokers out there that continue to dodge their bonding responsibilities under the law by either never attaining a bond or refusing to provide access to the bond to subhaulers,” de Leon testified. He noted as well that existing law does not include the requirement that brokers notify others of the bond information.

The result will be that if the work has been completed and the broker has not made payment, the dump truck operator can easily access the bond information to file a claim.

Call Statewide Insurance Brokers at (888) 258-0272 today for fast, free quotes on your insurance needs.

Types of Surety Bonds

April 9, 2012 By

In the construction business with the current economic climate, project managers and government departments are more likely to be more concerned about safeguarding projects against unexpected and rising costs and performance failures than ever before.  Consequently the need and demand for surety bonds continues to be high.

It is important for contractors to know that surety bonds are not insurance but an extension of credit in lieu of putting up cash for the terms required by the owner or named third party.  The  surety company which issues the bond is there to ensure collection if the contractor  breaches the terms of the bond.  Any financial penalty for failure to meet the bond’s terms will be borne by the contractor not by the surety company which will collect that penalty on behalf of the named obligee.

There are basically three types of surety bonds in construction.

  1. Bid Bond - These surety bonds relate to the bidding process and guarantee that if the contractor is awarded the contract based on his bid, he will perform the job for the approved price.  Generally, if the bid winner refuses to take on the job, a surety bond in such case will force the defaulting contractor to reimburse the bid issuer with the difference between the next lowest bid and his, along with any penalty as stated in the bond.
  2. Performance Bond – This type of surety bond is there to ensure that the contractor performs the work as agreed to in the construction contract.  This protects the obligee or owner from financial losses should the contractor not live up to his agreements as stated in the bond.  Again the amount will depend on the wording of the bond.
  3. Payment Bond – A payment bond is there to protect the owner or obligee from liens placed on the project from unpaid suppliers and sub-contractors should the contractor not pay them.  Again, the contractor will be penalized as per the terms of the bond.

Statewide Insurance is there to handle your surety bond needs in Texas, California, Oregon, Minnesota, Virginia and Nevada.  Give us a call today to find out what we can do for you.

Call Statewide Insurance Brokers at (888) 258-0272 today for fast, free quotes on your insurance needs.
Photo credit: pixbox77

Why Buy Oregon Bonds Insurance?

September 30, 2011 By

oregon surety bonds statewide insurance brokers

Like a lighthouse for ships, Oregon surety bonds instill confidence in your customers.

Your clients want to know that their homes and businesses will be safe when they hire contractors like you. That’s why it’s so important for you to provide proof of your reliability to these clients whenever you take a job with them. The way you do this is by purchasing Oregon bonds insurance, or Oregon Surety Bonds.

An Oregon surety bond is valuable for both you and your client. On the one hand, it tells your clients that you stand 100% behind your work. And on the other, it provides your clients reassurance that the job you’ve been hired for will get done while telling your suppliers and subcontractors that they will receive payment for all services rendered.

Many states now require that contractors possess both a bond and a license. But even in places where bonding is not required, it’s still an excellent selling feature for contractors looking to land new clients.

Getting Bonded

Securing Oregon bonds insurance requires finding a surety company to back you or an insurance agent give you a bond policy. A bond requires that you pay a premium to keep it current. The amount you pay typically depends on your experience and the size of the bond. Shopping around for the best bond deal will help keep your costs down.

Making the Best Use of a Bond

Once you purchase bonds insurance, it helps to keep that information with you in a working notebook or portfolio. You never know when a potential client–or even subcontractor–might ask to see proof of bonding. If you ended up having to call back later with the information, you may lose the job to someone else who can provide proof on demand.

It may cost you extra time to get Oregon bonds insurance. But if something happens and you can’t complete a job, your work project could end up costing you a lot more than just a little lost time.

Statewide offers surety bonds for California, Texas, Nevada, Oregon, Minnesota and Virginia.

Call Statewide Insurance Brokers at 888-258-0272 for your Oregon surety bonds, or bonds for other states as well.

Nevada Contractor Bonds

September 30, 2011 By

nevada contractors bonds statewide insurance brokers

Don't gamble with your business, get Nevada contractor's bonds today from Statewide Insurance Brokers.

Contractor’s bonds are nothing new but as contractors face more and more competition to secure bids on jobs, they are becoming more important for contractors to get. Nevada contractors may be unfamiliar with the way in which Nevada contractor’s bonds work, and this could lead them to simply neglect to secure one. This can be a major mistake since without a Nevada contractor’s bond it is not only difficult to land a job, but it also leaves a contractor vulnerable to liability claims and expensive lawsuits. If you are a professional contractor that wants to have a successful future in the construction business, then you need to learn more about how to secure a contractor’s bond for your business.

In many states it is not even possible to obtain a contractor’s license without being bonded. This is because a bonded contractor not only protects themselves, but also protects their clients. If a contractor fails to complete a job or a client is unhappy with the job as completed, they can be compensated through the bond. A bonded contractor is more desirable to clients because they can be confident that their bid will be protected financially. Contractor’s that are bonded are thus more likely to land bids and to be more successful in their business.

Unfortunately, it is not uncommon for contractors to have materials lost or stolen from a work site. This can be due to employee negligence or just plain bad luck. In either case, if a contractor is not bonded this could be a very expensive experience and lead to delays in getting a job done on time. Contractors who are not bonded put themselves at greater financial risk in addition to putting themselves at greater risk for lawsuits from unhappy clients.

Once a bond is purchased by a contractor they will need to make regular premium payments to keep the bond current. The amount of the premium depends on the number of years the bond is purchased for, the amount the bond is valid for and the company from which it is purchased. In order for a claim to be paid for by the bond, a company or individual would need to present evidence to back up their claim. Being bonded gives a contractor an added layer of protection from extortion or clients who are not being fair in their demands of the contractor.

Being a licensed and bonded Nevada contractor is the best way to ensure a successful business that is free from damaging lawsuits. Being bonded gives clients an added level of confidence in your ability to complete a job to their specifications and this will make your bid more competitive. While securing a bond may cost you a small amount monthly, it will pay off. Don’t leave your livelihood—your business—vulnerable by not having it bonded. Nevada contractor’s bonds are inexpensive and easy to obtain and should be sought after by responsible contractors who value a successful and profitable business.

Don’t leave things up to chance. Get your Nevada contractor’s bonds from Statewide Insurance Broker. Call us at 888-258-0272.

Minnesota Insurance Bonds – What You Should Know

July 5, 2011 By

Minnesota Surety Bonds Statewide Insurance Brokers

Working in Minneapolis? Need a Surety Bond? Call Statewide Insurance Brokers!

An insurance bond for any Minnesota work is similar to insurance, but involves three parties instead of one or two. It also is NOT an insurance policy. This type of coverage pays for damages that occur in the workplace or business due to a variety of conditions, such as lack of completion, not meeting standards, and other practices. Insurance is designed to pay for accidents and liabilities but insurance bonds will pay for things that occur that are not accident related. As a Minnesota contractor, you have to make sure that you are protected and that your business is protected, as well. Purchasing these bonds is a great way to do that.

Contractor’s license bonds, also known as performance bonds, guarantee that a job will be completed at a specific time and that performance will be up to par as the customer expects, or that the company will have to give up the bond to the client so that they are justly compensated. An insurance bond is between the client, the company obligated to the bond, and the insurance company that assumes the risk in giving the bond in the first place. When a job is not completed by a contractor, the insurance company then has to pay the client for the terms of the bond being violated.

This is more commonly known as a surety bond, because it ensures that the obligations in the contract will be fulfilled correctly. With an insurance bond, contractors and clients can both feel safer in their working relationship because everyone knows what is expected and what they are getting from the process. In addition to traditional performance bonds, contractors can also be subject to completion bonds, which are bonds that guarantee a project completion date regardless of any extenuating circumstances.

There are numerous benefits of the insurance bond in the Minnesota contracting industry. Because of the reputation that many contractors have gotten thanks to a few bad apples, it is hard for people to trust others working in their home. When you offer insurance bonds to your clients or show them that you’re willing to do whatever it takes, they are more willing to trust you in the end. When you want the work you have to prove it and insurance bonds are the way to do that in today’s world. Unfortunately, old-fashioned trustworthy handshakes aren’t good enough anymore. However, with insurance bonds and the right insurance products, you can be successful as a contractor by proving your trust to clients.

If you are working out of Minneapolis, St. Paul, Rochester, Duluth or anywhere in Minnesota, Statewide Insurance Brokers can help you obtain your insurance bond. Call (888) 258-0272.

California Contractors Bond – Financially Smart

February 18, 2011 By

California contractors insurance financially smartIf you are going to be a contractor in the state of California, there are some things that you are going to have to be aware of. There are certain laws and regulation put in place to protect the interests of your suppliers and your clients. Most importantly, many of these laws and regulations are there to protect you. This means that you shouldn’t cut any corners. Not only can this end up in the revoking of your contractor license, but it can also end up giving you a bad reputation. In today’s tough market, you don’t want to have to work with a bad reputation. This will kill your relationship with your most high profile clients and make it impossible for your operation to grow. This is why you need to get a California contractors bond.

When you are looking for a California contractors bond, you are going to get overwhelmed at first. You really do have many different options. You may even get discouraged if you are starting with bad credit. You need to think about the smartest way to get this bond which you need to practice as a contractor in California. The answer is to go online. When you look for a bond online, you are going to find the perfect website for attaining the bond. You will know that it is the right website because it will be safe and secure. There will also be many informational resources that you can use to learn more about contractors bonds.

In the end, only you can make the best decision about your California contractors bond. This is why it’s also important that the website you use offers you many free quotes with various requirements. No two contractors’ financial statuses are the same, which means that there are going to be many different bonds and rates for many different professionals. You will want to take your time and consider your options before you make the final decision. When you do this online, you will be giving yourself the opportunity to work at your own pace.

The key to getting a California contractors bond is to make sure that it is the kind of bond that is perfect for the work you do and for the clients you serve. You will also want to make sure that it reflects the amount of business you and the amount you spend on supplier services. By having your finances in order, you will be able to get the perfect bond for your independent contractor business.

Virginia Contractors Bond: The Online Option

February 18, 2011 By

Virginia contractors insuranceWhen it comes to starting your own business as a contractor in the state of Virginia, you are going to need to make sure that you are licensed and that you understand all of the rules as they apply to your business. For most people who are just getting started, this is really a matter of doing the proper research. You need to be sure that you know exactly what kind of work you are doing and what you need to do to make sure that you have all of the proper paperwork and legal materials. Many of these materials have to do with protection for you, your clients, and your suppliers, such as the Virginia contractors bond.

When you are looking for the best Virginia contractors bond, you are going to want to be sure that you are dealing with a secure and legitimate website. You may not know how to tell if you are on a good website. There are a few factors and details that you should be looking for. To begin with, you are going to want to make sure that the website states that it is indeed secure and that the information you enter is confidential. This is essential, since you may be entering some sensitive financial information. You are also going to want to be sure that the website you use offers plenty of educational resources.

When you are looking for the best rates on a Virginia contractors bond, you may find that you are set back because of bad credit. When you find the best website for getting bonds, you are going to find that they cater to all kinds of businesses and contractors, regardless of their financial situations. This means that you will be offered a number of free quotes and that you will be empowered to choose wisely. This is incredibly important when it comes to making smart financial decisions.

When you are gathering all you need to become a contractor, you cannot forget your Virginia contractors bond. This is a necessary protection for you, but it’s also necessary for all those parties you work with. This means that the bond will insure your clients and your suppliers. You don’t want to develop a bad reputation, so you need to make sure that you are following protocol. When you go online for this service, you will find it is quite easy to do.

Performance Bonds Insurance: Providing Assurance to the Client

February 15, 2011 By

Statewide BondsWhether it is bonds insurance or other financial assurances, smart contractors provide proof of their reliability before they take on a job. These financial instruments are as much a part of a contractor’s appeal as their past work. Now, more than ever, customers want to know their homes and businesses will be safe when they bring contractors in.

That is where a bond becomes a valuable tool for both the contractor and their client. For the contractor, it provides a selling tool for potential new clients. For new clients, it is a built in assurance that the job will be done, one-way or the other. Some areas require all contractors to hold a bond before they will issue a license.

To find bonds insurance or other financial assurances, a contractor needs to find a surety company to back them or an insurance agent to give them a policy. All of these financial instruments require premiums to keep them current. The amounts vary from contractor to contractor depending on experience and the size of the bond.

Shopping around for different companies will help keep costs down. Purchasing such an instrument provides the contractor with backup that will keep clients happy even before a job starts. It is also something that subcontractors and suppliers are happy to see as well. If a contractor walks off the job, many times those people do not see their money. A bond will prevent that occurrence.

Whether they are bonds insurance or other financial instruments, a contractor needs to keep that information handy at all times. When looking for new work, a client might ask for the information. It helps sell the contractor’s services to have all pertinent information on hand. Calling them later with the information may end up being too late to land the work.

With economics as they are, it is best to get the jobs landed whenever possible as soon as possible. It is also a good way to attract new subcontractors to your team. Keep it in your working notebook or portfolio. It is also a good idea to have that information available on a flyer.

Why do contractors need bonds insurance or other type of financial assurance? Many jurisdictions require that all contractors possess both a bond and a license. Even in places where it is not required, it is an excellent selling feature to new customers. It is also a piece of mind for the contractor. Sometime life happens and jobs go wrong. Those instruments are there to back the contractor up.