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We’ll help you obtain a commercial bond for your business.
What are commercial bonds?
Being bonded is different from being insured, as commercial bonds are not technically insurance. Instead, think of bonds as an extra layer of protection for the parties involved.
How do commercial bonds work?
For example, with surety bonds, the obligee (the party requiring the bond) is protected if the principal (the party needing the bond) fails to fulfill a portion or the entirety of a contract. While your business may have insurance, you may also need to purchase a bond depending on the type of work you’re doing. We’ll explore a few specific types of bonds below. Also, different jurisdictions may have their own requirements for bonding. Here are some examples of the different types of commercial bonds:
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Bid Bonds
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Non-Contract Bonds
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Payment Bonds
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Performance Bonds
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Probate Bonds
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Public Official Bonds
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Subdivision Bonds
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Surety Bonds
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Contract Bonds
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Fiduciary Bonds
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License Bonds
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Lost Instrument Bonds
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Maintenance Bonds
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Miscellaneous Bonds
Bid bonds for contractors and construction.
Bid bonds are usually used solely by contractors and construction businesses. Project developers often require contractors bidding on a project to purchase a bid bond in order to protect their interests. Before bid bonds were often required, some contractors would bid low to gain the contract and then raise the price once work had started or dropped out of the project altogether, resulting in problems for the project developer. Now, with bid bonds, project developers can feel better about the contractors they choose, as bid bonds guarantee that contractors are financially sound enough to complete projects and that the bids they place are serious and competitive.
Performance bonds are the follow-up to bid bonds.
As a contractor or construction company, you’ve gotten your bid bond, you’ve placed your bid, and now you’ve been awarded the project. That means more business for you, but that also means you’ll need to look into a performance bond. Developers often require performance bonds as a way to protect the investment they’ve made in the project. This type of bond guarantees that you as the contractor will complete the project as agreed in the contract. Rates for performance bonds depend on a number of factors, including the bid amount and past jobs that you’ve done.
