You never know when a seemingly good deal could go wrong. If you don’t take the necessary precautions, like purchasing surety bonds, you could find yourself in an unfortunate situation. Here are some helpful tips to know before buying surety bonds for your business.
Things to Understand
So, what are surety bonds? When a principle party fails to meet terms of an agreement, surety bonds pay the outlined amount to the oblige. Surety bonding assures that even when contracts break, you won’t be left high and dry. If you are unsure what bonds will fit your needs, here are some options to consider.
Types of Surety Bonds
Contract Surety Bonds guarantee obligations that fall under a contract. These bonds can protect your company from others failing to makes payments or perform specific labors.
Performance Bonds protect you as the principle from potential financial loss due to a contractor failing to perform contracted work.
Payment Bonds are similar to contract bonds because they guarantee payment from contractors, but these bonds still payout if liens exist on specific jobs or buildings.
Bid Bonds ensure that any contracted bid submitted by a contractor will be the bid price discussed, so you are stuck paying something you hadn’t anticipated.
Conducting business with other contractors can be risky at times. However, with surety bonds in place, you can have peace of mind knowing seemingly good deals stay that way.