Surety Bonds

Debunking the Myths around Surety Bonds

If you are a business investor, you will concur that one of the toughest aspects of running your operations is project management. Take for instance if you have a construction project on your facility. Dealing with a contractor can be tricky to a point of impacting negatively on your business strategy. This is where surety bonds prove invaluable.

Brief Overview on a Surety Bond

According to the Associated General Contractors of America (AGC), a surety bond is not an insurance coverage, but a guarantee between three parties. There is a surety company, which gives you as the business owner or the obligee guarantees that the principal, otherwise known as the contractor, will complete the project.

Why consider a Surety bond?

According to the National Association of Surety Bond Producers (NASBP), one in five contractors fail to deliver in all projects. Once a contractor obtains surety bonds, it means the surety company will have to find another contractor in case of default. In essence, this bond ensures contract completion even if the contractor defaults. 

Types of Surety Bonds

Surety bonds offer peace of mind and cushion your company against financial loss in case of default. Why take chances?