Construction projects are among those sensitive projects that requires timely completion. To ensure that the project completes on time the project owner or the government asks the contractor to sign a surety bond. Let us find out some more facts about the surety bond here:
- A surety bond always has three party involved in it. There is a surety company that confirms the owner (oblige) that the contractor (principal) will complete the project on time.
- When a surety bond is used in construction industry, it is called construction surety bond.
- There are chiefly three types of contract surety bond: the bid bond, performance bond and the payment bond.
- The bid bond provides a financial assurance about the bid. It assures that the bid has been submitted in good faith and the contractor who has bid on the project has a good faith and is willing to enter the contract at the price bid and will also sign the other bonds of the contract.
- The performance bond ensures that the person who has taken the charge to complete the project will for sure complete the project as per the terms and condition of the project.
- The payment bond assures that the contractor will make all the payments to the worker, material supplier and the sub-contractor.
- The companies providing surety bonds are mostly banks or a sub division of insurance company. The state insurance department is the regulatory body for the risk management of the insurance policies and the surety bond.
- You will find difference in the premium amount of every surety. It can range from one half to two percent. The variation depends on the size, duration and the type of the project.
- The prequalification of Surety Company helps you to know about the contractor’s ability. Surety on the basis of the prequalification tells you that the contractor is able to complete the project or not.
- If the bonds are mentioned in the contract document then it becomes the duty of the contractor to obtain the bonds.
If you are also looking for surety bond to get a contract, you can go through the popular surety bond companies offering bonds online. To get a surety bond quote online you can directly contact on the phone number mentioned on the surety company’s website. It is always recommended to go through and various online companies providing surety bond and compare the premium amounts.