Surety bonds provide financial security and construction assurance by assuring project owners that contractors will perform and complete the work specified while also paying their subcontractors, laborers, and material suppliers. A surety bond is a risk transfer mechanism where the surety company assures the project owner that the contractor will perform the contract in accordance with the contract documents. Bonds are issued to contractors who submit the proper information requested in the General Bond Requirements.
Why Get a Surety Bond?
With surety bonds, owners, lenders, taxpayers, contractors, and subcontractors are protected because:
The contractor has undergone a rigorous prequalification process and is judged capable of fulfilling the obligations of the contract.
Contractors are more likely to complete bonded projects than non-bonded projects since the surety company requires personal or corporate indemnity from the contractor.
Bonding capacity can increase a contractor’s or subcontractor’s project opportunities.
The surety bond producer and underwriter may be able to offer technical, financial, or management assistance to a contractor; and the surety company fulfills the contract in the event of contractor default.
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