To a contractor, calculated risk can be fortune’s accomplice. Failure to recognize, calculate and properly manage the risk inherent in any construction project can, however, lead to financial disaster for any one or all of the participants in a construction project.
Common strategies for allocating project risks include the use of contractual indemnification provisions, requirements for builder’s risk and commercial general liability insurance policies, and requirements for performance bonds and payment bonds.
A payment bond is required on many construction projects. In the construction industry, the payment bond is usually issued along with the performance bond. The payment bond forms a three-way contract between the Owner, the contractor and the surety, to make sure that all sub-contractors, laborers, and material suppliers will be paid leaving the project lien free. A Payment Only Bond is rarely requested.
Payment Bond Terms
The Surety is the company licensed by the Insurance Department and the regulatory agencies to write bonds within the state of the country on which the work will be executed.
The Contractor, also called the principal, promise in the payment bond that the contract will be executed according to specified terms, while the Surety promises that if the contractor fails on his payments, it will pay damages to all demanding parties.
BFbond.com has an easy application that can be filled out online, which will give the necessary information for the underwriter to know who you are and where you are coming from.
THAT’S IT! Easy as 1, 2, 3, our streamlined process will get you on the fast track to obtaining a Payment bond.
For more information about Payment Bonds visit us at www.bfbond.com or call us at 1.800.921.1008