What is a Contractor Bond?
When you hire a contractor, you are often required to obtain a contractor's bond. This bond protects you from a variety of potential problems and saves both you and your customer. It protects you in case your contractor leaves before the completion of the project or fails to pay back for supplies that are not provided by him. It can also protect your employees and your business from lawsuits when a job goes poorly. You can find out more about this important policy by Getting a free quote from us.
How does Contractor Bond work and why do you need it?
In case of a claim, surety bonds pay for the expenses when the contractor fails to complete a project. While general liability insurance covers accidents and mistakes, a contractor bond will protect customers in case the contractor performs a project incorrectly.
There are many different types of contract bonds. Some are guaranteed by the Small Business Administration, which reimburses the surety for losses. The amount of money a surety will reimburse the contractor depends on the size of the contract, the working capital of the principal, and the manager’s experience. To qualify for a bond, the contractor must have at least 5% working capital in cash and should have sufficient cash flow to cover its current liabilities.
Who is Protected by a Contractor Bond?
Contractor bonds protect the guarantor against damages that occur during the course of the project. A contractor bond will also provide a legal way for a party to file a claim against a contractor. In most cases, a claim against a contractor bond is valid if the contractor fails to complete the project according to the contract terms.
Free Financial Advice
Contractor Bonds are bonded for certain projects, which are meant to protect the customer and the contractor. If you want to Purchase our contractor bonds policy or want to know more about Contractor Bonds insurance and how much they cost? Our financial advisors are here to help you choose the best policy that will meet your needs and budget. Get a Quote now.
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