As a contractor, you know that a multitude of potential issues can prevent you from finishing a job as planned. And though you always try to perform in a professional manner, there are some circumstances that cannot be avoided. If this occurs, the project owner can take legal action to recover their losses. How can you protect yourself and your business from similar situations?
Surety bonds act as a guarantee that the job will get done as promised. If you cannot complete a job or if your business defaults during a job, the surety company is obligated to ensure that either another contractor finishes the job or the project owner is compensated for losses. If fact, surety bonds are so valuable that most government entities require you to purchase a bond before being awarded a job contract.
Not only do bonds protect your clients, but they also show that you run a responsible and professional business. Oftentimes, bonded contractors are sought out to complete projects. In some cases, the resulting boost in business can cover the cost of purchasing the appropriate bonds.
There are many types of bonds and discussing your options with an independent insurance agent is the best way to ensure that you get the right coverage. Three of the most common types of surety bonds include:
- Payment bond: Guarantees that subcontractors and suppliers are paid for their work as performed under contract.
- Bid bond: Guarantees that if awarded the job contract, the bidding contractor will purchase the appropriate bond(s).
- Performance bond: Guarantees that the job will be completed as stated in the contract.
We’ll help you find the right coverage. Call McFarlin Insurance Agency at (410) 312-7800 for more information on Maryland surety bonds.