Surety bonds are an important part of the construction industry and are quite often a core requirement for contractors. Bonds, and specifically Contract Surety Bonds, differ greatly from insurance in that they are three party agreements between the contractor (the ‘Principal’), the project owner to whom you are obligated to perform the work (the ‘Obligee’), and the party who guarantees your obligation or promise (the ‘Surety’). Different forms of Contract Surety are required during different stages of the construction cycle.
Contract Surety Bonds Include
- Bid and Tender Bonds: Provides financial assurance that a contractor will enter into the contract for the successful bid price.
- Performance Bonds: guarantees that, in the event of a default by the contractor, their obligations under the contract will be fulfilled.
- Labour & Material Payment Bonds: covers outstanding payments to the Contractor’s subcontractors and suppliers.
- Maintenance Bonds: guarantees the maintenance and repair of the contract work for a specified period after completion of the project.
Some Important Benefits of Contract Surety Bonds:
- Competitive Advantage: Having a surety partner demonstrates a Contractor is stable, well managed and capable of completing the project
- Financial relief for the Contractor: frees up cash that would otherwise have to be allocated to providing security (no tangible security is required).
- A surety can offer sound technical and financial advice to the contractor.
- The Bond provides financial protection and risk transfer for the Obligee
Arrange a Consultation with Fenn & Fenn Insurance Practice Inc.
We understand the importance of surety bonds to your business and can respond to all your bonding needs. We can help your project succeed beginning with the bid right through the post-construction maintenance period. At Fenn & Fenn Insurance Practice Inc. we enjoy excellent relationships with a wide range of leading surety companies and our streamlined approach ensures a consistent, fast, and efficient process for our clients.
Call us to arrange a consultation with one of our professionals to discuss your bonding requirements.
