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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.
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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.