What Everyone Expects To Get When A Surety Bond Is Part Of The Bargain
Surety bonds are almost always part of a job bidding process. It is very rare for any kind or type of job requiring some sort of contractual work to not have a surety bond involved. Yet, what does everyone get when the surety bond is part of the bargain? After you read the following, you may always want a bond to be involved for whatever project you are doing and regardless of which side of the business fence you are on.
As the Consumer/Obligee
As the person requesting contractual work, you get a contractor that promises to do the work, do it correctly the first time, and complete it in the time the contractor said that he/she would complete it. The bond acts as the legal promise that this work obligation will be met under the terms set forth by the contractor for your benefit. When the contractor fails to deliver on any one detail, you, the consumer, can sue the contractor. Since most contractors would prefer not to be sued, you are guaranteed the completed job for which you hired the contractor.
As the Contractor
You might be wondering what the contractor gets out of the surety bond, since a lot of things could go wrong and lawsuits could ensue. Actually, the surety bond provides a more unique feature for the contractor. It ensures that he/she gets the job! Most consumers will not hire a contractor who is not bonded and ensured because they want that added layer of protection. Ergo, the contractor gets consistent work out of the surety bonds that he/she purchases for each job that he/she is bidding for.
As the Insurance/Surety Company
There is a third party involved here, one which the consumer is rarely familiar with and with whom the contractor deals with regularly. That third party is the insurance or surety bond company. The company makes money every time the contractor wants to get work but needs a surety bond first to insure the work he/she does and ensure that he/she gets work. The surety bond fees are non-refundable, meaning that the fees are money in the company's pocket. Sell enough surety bonds to contractors, and the company's bottom line is in the black and looking very pretty. If the company sells enough surety bonds that do not result in lawsuits, that is guaranteed and continued profit for the insurance or surety bond company.
Contact a service, like NFP, P & C, Inc., for more help.