In recent years, construction projects have skyrocketed, as have the associated risks. With this activity and demand, surety bonds are more important than ever.
A surety bond is a three-party agreement, where the surety assures the project owner that the contractor will fulfill the contract in accordance with the related documents and requirements. This three-party agreement is what differentiates a surety bond from an insurance product. Surety is more like a bank letter of credit, and it is underwritten on zero loss. A fee is charged for the use of the surety credit.
Consider these 5 tips when deciding whether you need a surety bond:
- Federal, state, and local municipalities require bonds if tax dollars are used to pay for the work.
- Bank financing for a private project requires bonds to make sure that the funding they provide is completed.
- Major subcontractors are required to provide sub bonds to the general contractor because they are an essential part of the job that can’t be delayed. `
- Replace the need for collateral – site improvement or subdivision bonds can be used instead of collateral being posted by the developer.
- Surety bonds can be provided to the court in lieu of liens and appeals.
The Hilb Group’s surety specialists focus solely on working with you and your client to develop solid bond programs tailored to meet their company’s needs. Our experienced staff will help you with the full range of contract business, from the small specialty contractor to the large general and multi-trade firms.
Many bond requirements call for bonds that are written by Treasury-listed and highly rated surety companies. Our experts put together the pieces of the bonding puzzle by offering a wide range of options from many companies that have the security and acceptability the marketplace demands.
Licensed professionals at the Hilb Group will ensure your surety arrangements advance your business plan. Contact us with your surety bond questions and for assistance. For more information on surety bonds, visit NASBP.org.