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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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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.