What You Need to Know About Contractor Bond Insurance
There are many different types of contractor bond insurance policies. These include Fidelity, Performance, Bid, and Subcontracting bonds. These policies protect you and your customers from dishonest employees. Contractor bond insurance is not mandatory, but is strongly recommended. Read this article to learn more about these types of insurance policies. Here’s a brief overview of the different types. After reading this article, you’ll know what you need to know about contractor bond insurance.
The growing number of general contractors who are now requiring subcontractors to carry contractor bond insurance highlights the importance of ensuring the quality of subcontracting work. However, this responsibility must be approached with equal parts caution and enthusiasm. This article provides some helpful tips for successful subcontracting. Before signing the subcontract, make sure you thoroughly review the contract and all the terms and conditions. It’s essential to understand the bond insurance terms and conditions so you can avoid any missteps.
When you hire a contractor, it is necessary to have performance bond insurance for your projects. The surety will provide financial assistance to the original contractor or tender the job to another contractor. They will act within the limits of the penal sum specified in the contract. If your contractor is at risk of default, notify your surety immediately. While you may be tempted to blame your contractor, it is important to remember that you have the right to make a claim if your performance has fallen short of your expectations.
A bid bond is a legal form of payment for contractors that is commonly used to secure large construction projects. Its many advantages over a letter of credit include a lower cost and less impact on cash flow. Since bid bonds are arranged through an insurance broker, they must work with a surety bond specialist. Since surety products are available through several markets, a reputable insurance broker will be able to help contractors obtain the bonding limits they need at preferred market rates.
A fidelity bond policy can be essential to protect the property and business of a contractor. While general liability and worker’s compensation insurance policies cover incidents that result in injury or property damage, fidelity bond insurance is unique in that it covers intentional wrongdoing by employees. A fidelity bond is not a substitute for other insurance coverage, but can provide additional security for your business. It is highly recommended that you discuss fidelity bond insurance with your insurance agent.
How much does contractor bond insurance cost? The price depends on several factors, including the type of work you do, the amount of coverage you need, your location, and your credit score. Generally, the higher your credit score is, the lower your bond insurance premium will be. However, it’s important to note that you can save money by choosing a smaller deductible for your bond policy. Then, you can compare prices among different providers.