Most General Contractors don’t realize what a Contractor Bond is until a client has expressed an interest in obtaining one. Contractors Bond involve 3 different parties. The first is the client, the second is the General Contractor, and the third is the bonding company.
Contractors Bond act as a guarantee to the client from the General Contractor that the project will be finished up to expectations. If the project is not finished up to the expectations of the client the Contractor Bond will offset the financial cost the client has incurred to finish or fix the project.
Private companies are now expecting General Contractors to have a Contractor Bond in order to do business with them or even bid on the project. All government contract work requires that Contractors meet certain bonding requirements.
A Contractor Bond is an assurance to the client that the project will be done and all vendors will be paid without any financial loss to the client. Having a Contractors Bond shows clients that you are financially able to obtain the bond and also you are looking out for their best interest.
TYPES OF CONTRACTORS BOND
A bid bond is a guarantee that your company has the ability to do the project at the price you say it will. All government contracts and most private contracts are now requiring that contractors have the right bonds in order to bid on the project. A bid bond gives your clients that reassurance that you can complete the job without any financial risk to them.
Performance Bonds ensure that you will complete the job to the satisfaction of the contract. If you are not able to complete the project, the bond makes sure that all financial loss is covered.
Payment bonds makes sure that laborers, suppliers, and sub contractors get paid in the event of the contractor defaulting. Payment bonds are required in projects over $30,000 with the Federal Government and must be 100% of the contract value.
For an immediate answer to a General Contractor Insurance question, give us a call at 1-800-329-2040.