A surety bond is a three-party contract comprised of the surety, the contractor and the owner. A surety bond is not your typical insurance policy. For privately-funded projects, surety bonds allow for the smooth transition from construction financing to permanent financing, all while providing the contractor support until completion of the project. For a public project, surety bonds support contractor prequalifications, subcontractor payment protection and contract completion protection for the public. Essentially, a surety bond can provide you with funds when you need it for a public or private project. But that’s not the only benefit of surety bonds for contractors.
What Does a Surety Bond Cover?
There’s multiple types of surety bonds to be aware of. We offer the following:
- Bid Bond – For when contractors submit project bids.
- Performance Bond – Required for construction projects in order to ensure that all obligations by the contractor are fulfilled.
- Payment Bond – Guarantees that subcontractors, laborers and suppliers from the contractor are paid.
- Maintenance Bond – Makes sure that a contractor remedies any defects or the owner is compensated for defects after the project is done. These bonds are only available for a short period of time.
- Wage & Fringe Bond – This bond is used in negotiating collective bargaining agreements from companies.
- Right-of-Way Bond – Right-of-way bond gives contractors the ability to work in the area around the property. This includes installing or repairing utilities, signals, sewers, sidewalks, streetlights, and more.
- Release-of-Lien Bond – This bond is needed if you’re going to remove a lien on the property you’re working on. It’s designed to replace the property as security for the lien.
Why Do Contractors Need Surety Bonds?
If you’re planning on working on a project that requires construction in the future, then you may need a surety bond. Think of a surety bond like a line of credit instead of an insurance policy. It keeps you covered and gives you funds when you need them.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.