One way for a construction contracting company to ensure access to critical relationships needed for sound business advice and for qualifying for surety credit is to partner with a professional surety bond producer, according to experts at the National Association of Surety Bond Producers (NASBP).
Most contractors know that surety bonds help establish their credentials, demonstrating their ability to perform through performance and payment bonds. However, they may not realize the full value of building a relationship with an experienced bond producer like BFBond.com / Bernard Fleischer & Sons Inc.
We help guide companies through the process of achieving surety credit and act in many capacities – mentors, educators, advisors – with construction firms to ensure that they mature and remain successful. Check out our Surety Bond Primer below:
A surety bond is a legally binding contract that makes sure three parties carry out their obligations: the surety company, obligee, and principal. The surety company is the one that provides assurance to the owner (obligee) that the contractor (principal) will carry out a contract. Being in the contracting business comes with many tasks one of which is being bonded. Bonding requires a contractor to know requirements of a project, type of bond and the amount involved. As a contractor, you should know that having a surety bond is not the same as securing insurance. A surety bond is meant to cushion the obligee against a shoddy or unfinished job. Below are tips that will assist you to get bonded as a contractor and make the process of getting bonded efficiently:
Understand how surety bonds work
Know the difference between insurance and surety bonds. Insurance protects your business but bonds don’t. A surety bond is an additional security feature for a client. There are three main types of bonds:
Bid bond
This a bond that guarantees a bid has been proposed with good intentions and the contractor will carry out stated obligations at the bidding price.
Performance bond
This is a surety bond that cushions the owner against financial loss in case the contractor fails to carry out the contract as specified in the terms and conditions.
Payment bond
This is a bond that guarantees that the contractor will meet expenses for paying a given cadre of workers, subcontractors, and suppliers of equipment.
Be acquainted with bond pricing
The prices of surety bonds are based on a percentage of the total value of the bond that is required. The bond premiums vary according to the type of bond, size, and duration. The variation is from 0.5% to 10%.
Partner with a credible surety agency
When you work with a credible agency like BFBond.com / Bernard Fleischer & Sons Inc. (Check out our Google Reviews!) you will get a bond that is affordable and fits into your job requirements. We take the time to research surety options available to you and help you decide what’s best for your unique situation.
Learn more at BFBond.com or call us at 800.921.1008
