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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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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.