How A Surety Bond Company Works
A surety bond is necessary to protect a business' best interests. Working with a dependable surety bond company can make a big difference when it comes to your protection. Because several surety bond companies exist today, it can be a challenging task to find one which has a great reputation, impressive track record, and a strict bonding process.
A surety bond is usually used in the construction industry. It is a three-way agreement between the owner, the contractor, and the surety bond company. It ensures the owner that the project will be completed by the contractor. With a surety bond, the owner is protected in case of contractor default.
Surety bond companies are considered part of the insurance industry. The main role of these companies is to guarantee the commitment of the contractor to follow a contract. Some surety companies though may charge a premium for backing a contractor.
Just like any insurance-related topic, there is a risk with guaranteeing a contractor's capacity to work on a project. This is why surety companies are very choosy in the contractors they bond with. Before a contractor can get the backing of a surety company, he needs to prove that he has everything needed to complete the project from start to finish. This includes character references, financial statements, and line of credits.
Before you work with a surety bond company, ask around your neighborhood regarding the surety companies other businessmen recommend. Once you have a list of names, do your own research and find out about the kind of contractors they bond with. Also ensure that the bonding company is licensed for bonding by checking the US Treasury Department. You can also ask the company about the bonding process they use for their contractors. This way you can see if they are very strict about whom they bond with.
Be sure to also let the surety company know what you want carried out so that you get an understanding and they can draft a proper underwriting agreement with the contractor for you. - 23211
A surety bond is usually used in the construction industry. It is a three-way agreement between the owner, the contractor, and the surety bond company. It ensures the owner that the project will be completed by the contractor. With a surety bond, the owner is protected in case of contractor default.
Surety bond companies are considered part of the insurance industry. The main role of these companies is to guarantee the commitment of the contractor to follow a contract. Some surety companies though may charge a premium for backing a contractor.
Just like any insurance-related topic, there is a risk with guaranteeing a contractor's capacity to work on a project. This is why surety companies are very choosy in the contractors they bond with. Before a contractor can get the backing of a surety company, he needs to prove that he has everything needed to complete the project from start to finish. This includes character references, financial statements, and line of credits.
Before you work with a surety bond company, ask around your neighborhood regarding the surety companies other businessmen recommend. Once you have a list of names, do your own research and find out about the kind of contractors they bond with. Also ensure that the bonding company is licensed for bonding by checking the US Treasury Department. You can also ask the company about the bonding process they use for their contractors. This way you can see if they are very strict about whom they bond with.
Be sure to also let the surety company know what you want carried out so that you get an understanding and they can draft a proper underwriting agreement with the contractor for you. - 23211
About the Author:
A surety bond is used to to ensure that a company will fulfill their contractual obligations where a fidelity bond protects against employee theft. Both types of bonds are very common in the business world.
posted by X - Men @ 1:15 AM
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