Construction is an expensive and risky business where there is the danger of contractors not being able to undertake the projects at the amounts they bid. There’s a second area of concern too, as payment to subcontractors and for materials can often cause issues for contractors.
Each project entails unique factors, ranging from design requirements and owner desires, to unfamiliar parties and unexpected weather conditions. There could be a snowstorm or failing subcontractor that can put a project in jeopardy.
So what’s the best way to protect against these dangers?
Surety bonds! A surety bond is a written agreement between three major parties; the surety, obligee and principal. The written agreement is a guarantee under which one party (the surety) obligates itself to a second party (the obligee) to answer for the default of a third party (the principal).
Through underwriting, surety companies, such as Colonial Surety, underwrite contractors to make sure that they have the right experience, financials, and equipment to be able to perform the project under their bids’ terms and complete projects in a satisfactory manner, while properly paying subcontractors and for materials. The underwriting processes helps project owners know that they’re dealing with a quality contractor they can trust.
The bonds ultimately cover costs in the case of failure to be able to take on a project at the contractor’s bid’s amount, failure of payment to subcontractors or for materials, and performance by the contractor. The project owner seeks payment to cover their losses up to the bond amount from the surety, who then seeks indemnification from the contractor the surety bonded. Learn more about the importance of surety bonds in construction.
So where can you purchase bid and payment/performance bonds?
Colonial offers the direct and digital way to obtain bid and payment/performance bonds as well as any other surety bonds. We are the insurance company — which means no agent, no broker, and no middleman. We make it easy to obtain your bond. The steps are easy — get a quote online, fill out your information, satisfy underwriting requirements, and enter your payment method. Print your bond from your office. It’s that simple!
Colonial gives you an easier way to manage your bid and payment/performance bonds online. Having your single and aggregate limits in writing allows you to update your work on hand and adjust your bonding capacity in real time.