image of architect on siteIf you’re a contractor who works on city, state or federal projects, chances are you’re familiar with various surety bonds. Because governments want to ensure that taxpayers’ dollars aren’t being wasted, many public projects (particularly those that exceed $100,000) must be bonded for financial protection. Let’s take a brief look at supply bonds, which are a type of contract bond.

Surety bonds act as a contract between three parties. In the case of supply bonds, the bond ensures that the supplier will deliver materials as promised in the project contract (but there is no contractual obligation on labor). If a contract breach occurs, the surety company is responsible for compensating the project owner for losses, for which the supplier will have to repay the surety company.

Each state has varying laws when it comes to posting supply bonds. Wondering if you need one for a project? Your independent insurance agent can help you sort out the details. When applying for a surety bond, you’ll need to provide information such as your business’ financial statements, proof of insurance and even your personal credit score. This helps determine how likely it is that you’ll trigger a claim, which goes into calculating the premium of your supply bond.

This application process makes it nearly impossible for contractors with poor credit to obtain contract bonds, including supply bonds. If your business is new, you may pay a higher percentage of the bond price as you accrue credibility. But with experience comes lower premiums and larger projects.

Find the coverage you need. Call Insurance Agent2000 at (925) 827-0510 for more information on Concord surety bonds.

Posted 10:57 AM

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