Not many people understand what construction surety bond is. In fact, most start up and medium sized contractors have little idea what this means, how construction bonds affect their business, and why they need such bonds. If your business is based in Texas, then you are fortunate because you can get the services of Baldwin-Cox Agency, the leading bonds and insurance company in the greater Dallas surety market. Still, it would be best if you will have a basic idea about construction bond and how it will work for your company’s best interests. Here is a general overview of surety bond and how it will help your company.
First, you have to differentiate bonds and insurance. That is because a surety bond is radically different and, actually, not a form of insurance. If you are familiar with the provision of guarantee, then it fits the description because a bond is a guarantee. A surety guarantees that a contractor, also called Principal, will fully perform the obligations stated in a contract. That is why if you have a bond as a contractor, you will be able to easily clinch a project because most companies that seek contractors want some form of assurance that their projects will not be derailed. If you have a Dallas surety bond, then your company’s credibility in the Texas construction market will be higher thus you can get more projects.
Second, there are also three major types of surety bond obligations. It is important to know them because companies who hire contractors are very specific about this issue. They usually require a contractor to obtain a specific type of bond obligation before they proceed with the implementation of the contract. A bid bond guarantees that you will honor your bid for a project. A performance bond guarantees that you will finish the job on time. Lastly, a payment bond guarantees that you will pay employees, sub-contractors, and suppliers. In the Dallas surety market, different types of bonds are available whether for single and small projects or for larger projects.
It is important to secure a surety bond because most of the time, owners or companies that hire contractors will include it in the provisions of the contact. So if your company can not comply with such requirements, then there is no way how you can make business with these companies. Essentially, a Dallas surety bond signifies that your company is trustworthy because you are putting your money at stake. If you fail the obligations set forth in the surety guarantees, then your bond is in full force and effect. The project owner therefore can claim a penal sum from you and from the surety company.
The issue of surety has become very important especially during times of major economic downturns. That is because there are lots of bankruptcies going on and companies are not sure if contractors will go under and not finish the project. This can have a great impact on their profitability. So to be sure, they require bond from contractors which is actually a win-win solution. That is because you can easily clinch a project if you can offer guarantees while owners will have their peace of mind.
Do you want to know the best surety company that you can find in Dallas? Visit or website today and see why we are rated as the most trusted Dallas surety company in Texas.
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