A surety bond tells the client you are working with that you will complete it as contracted, and according to the specifications in the contract. If you neglect to get the project done and all the bills paid for workers and supplies, the insurance agency will hire another contractor to finish the job. You pay for the bond, and it gives you credibility. A background check is done along with a review of your credit, and your company’s financial situation. Being able to get a surety bond assures your client that they can trust you.
It was back in 1894 that the US Congress passed the Heard Act, requiring all federally funded projects to have surety bond protection. Since that time, that has been the pattern for governmental projects. But surety bonds are also demanded by some non-governmental clients, for privately owned construction projects. This is something much to be desired when considering how some construction companies are known for collecting the cash and fleeing the coop.
So, surety bonds are contracts between three parties – the contractor, the client, and the insurance company. They protect the client from fraudulent activities on the part of the contractor, and anything that interferes with the work being accomplished. For more information and help in getting a surety bond, contact Koch Insurance Group. They are happy to assist you.