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What is Surety Bond insurance?
Essentially, a surety bond is an insurance policy between the contractor, the client and a third-party surety bond company that covers your promise. An issuer of a bond can purchase bond insurance to guarantee scheduled payments of interest and principal on the bond to its bondholders in case the issuer defaults. Once the issuer purchases bond insurance, its credit rating is replaced with the insurer’s credit rating. Premiums are a measure of the perceived risk of failure of the issuer and are paid to the insurer in either lump sums or installments.
What are the benefits of being bonded?
Being bonded gives issuers the ability to leverage business growth. With the increased stature of having the insurer’s credit rating, a business can feel safer in taking risks to improve and grow the business. This is especially true in the construction and financial industries.
Some bonds we handle include, but are not limited to, the following: we offer COMMERCIAL AND CONTRACT BONDS
When Will I Need A Surety Bond?
When you deal with construction, either as a project owner, general contractor or sub-contractor, you may eventually encounter the need for a surety bond. First and foremost, you do not need a surety bond until someone requests one. If you want to bid on public construction contracts and many private contracts, you’ll probably need a surety bond. For example, surety bonds are mandatory for any federally-financed construction project valued over $150,000 and are mandatory on many state projects as well. Commercial contracts for manufacturing and service or supply work may also require a surety bond.
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