What are Surety Bonds?
If you own a construction, shipping or similar type of business in which you contract out your services, you may find that your clients or the law require that you buy a surety bond before business can proceed. The purpose of this bond is to ensure that the contract is completed even if the contractor (because of bankruptcy or for some other reason) defaults. Surety bonds are purchased from insurance companies. If the contractor does default, the surety company will either have to compensate the individual or business that hired the contractor or find another contractor to finish the work. Below are the main categories for surety bonds.
As the name implies, this type of bond ensures that the contractor will complete the work as laid out in the contract signed by both parties.
The purpose of payment bonds is to ensure that the contractor’s subcontractors and suppliers are all paid for the work carried out (or for the supplies provided) for completion of the contract.
Ancillary bonds are not directly related to work that was performed. Instead, they are designed to ensure that any requirements (such as laws or other regulations regarding the work on the project) are adhered to.
Bid bonds are designed to ensure that the bidder for a contract will carry out the contract and will provide any performance or payment bonds the project owner requires if awarded the contract.
Need a Surety Bond?
There are many circumstances in which you might need a surety bond when signing a contract. In addition to the federal, state and local government requirements for surety bonds, many private businesses are going to want these bonds for construction, supply and service contracts. Do you need a bond? Our agency can help you get started.
Learn more today. Call Bryan Insurance Agency at (888) 565-2212 for more information on Long Island surety bonds.