What are Payment & Performance Bonds?
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What is a Contract Bond?
Contract bonds are a type of surety bond that must be filed with the owner of a project (the “Obligee”) as a condition for the contractor to bid on or to enter into a contract. Contract bonds consist of two primary categories – (1) bid bonds required of contractors as a condition for a contractor …
3 Basic types of contract Surety Bonds
Bid Bonds The bid bond assures that the bid is submitted in good faith and that the contractor will enter into the contract at the price bid and provide the required performance and payment bonds. Performance Bonds The performance bond protests the owner from financial loss should the contractor fail to perform the contract in …
What are Performance Bonds?
A bid bond is replaced by a performance bond when a contractor accepts a bid and proceeds to work on the project. A performance bond protects a client from a contractor’s failure to perform according to the contractual terms signed. In the event that the work done by a contractor is poor or defective, a …
What is a Bid Bond?
Bid bonds are a subset of the broader category of Contract bonds that must be filed with the project owner or government agency soliciting bids for public or private construction contracts. Bid bonds provide the project owner with security that the winning bidder will sign the contract and meet the requirements of the bid specifications. …
What is a blank bond form and where do I get one?
What is a blank bond form and where do I get one? It is a blank copy of the bond that you are required to post. It states exactly what the bond is guaranteeing. Your bond agency will use it to create the original bond by completing the blanks on the form, signing on behalf …
What is a blank bond form and where do I get one? Read More »
How much do surety bonds cost?
How much do surety bonds cost? Bond premiums vary greatly depending on the applicant, the bond type, surety, and the obligee. Just like other forms of credit, everyone does not receive the same rate. Surety rates are typically anywhere from 1-3%.The lesser the risk the lower the rate. Why do I need a surety bond? …
What is the process to obtain a bond?
What is the process to obtain a bond? To start the process you need to apply then be given your premium cost and an agreement between you and the bonding company. The bond is then issued 1-2 business days from receipt of payment and the agreement (original agreement is often required). How do surety bonds …
How does Surety Underwrite?
Each surety company has its own guidelines and underwriting criteria. However, the following basic factors will be taken into consideration in some format. Capacity Does the applicant have the skill and ability to perform the obligation? Capital Does the financial condition of the applicant justify approval of the particular risk? Character Does the applicant’s record …
Prequalification
The surety underwriting process is focused on pre-qualifying the contractor. It takes time to develop and present data, address questions the surety may have, and verify information. Before issuing a bond, the surety must be fully satisfied that the contractor is of good character, has the experience that matches the requirements of the projects to …