Top Three Benefits of Surety Bonds

A surety bond is a three-way contract between the bonding company, you as the property or business owner, and your customer. Surety bonds in New York provide assurance (not insurance) that you will complete the job or provide services as outlined in the contract, up to a specific bond amount. There are many benefits to bonding that you should think about if you are performing work or providing services in any industry.

Limits Fraudulent Companies

One of the benefits of surety bonding whether you are the company or the obligee is that it limits fraudulent companies. When you obtain bonding for a job or a service that you will be performing, that ensures to the client that you will keep your end of the contract up to the amount of the bond.

Maintains Compliance

In many instances, a surety bond is required in order to proceed with work or as part of an insurance policy. Surety bonds are beneficial in this manner in that they help you remain compliant with the terms of your insurance policy or a job contract.

Opens Up Job Opportunities

Many clients and customers will not work with companies who do not provide bonding for their products and services. Others prefer companies that have been bonded. Either way, when you are responding to a request for proposals for work that an agency or another business needs, offering a surety bond for the project will give you an edge over your competition.

When you are looking for a way to obtain more contracts, stay in compliance with the terms of your insurance policy, obtaining surety bonds in New York can provide the answer.

How Do Surety Bonds Protect Construction Clients?

At one time, the ability of a group of handymen to form a construction company and then low bid a new project in order to undercut existing firms was a great opportunity. However, business clients often learned the costs of choosing a low bid contractor without checking the contractor’s ability for fulfillment. At the least, such clients could generally expect delays as the newly-formed company learned the ropes. Surety bonds in Pennsylvania help protect against these types of delays.

 

Construction Delays Can Mean Unplanned Business Costs

 

Many businesses cannot afford the costs associated with delayed construction. At the least, they would have to report delays to their own financial backers. Non-performance on the part of the construction company can mean serious consequences to the client.

 

In addition, one of the most important things a new company must learn is proper cash flow management. In the absence of a healthy cash flow, the construction company has a very real chance of defaulting completely, leaving the client to start over from scratch.

 

Sureties Protect the Clients

 

Construction companies cannot always guarantee their performance, but a large insurance firm with deep resources can make the guarantee to clients. Construction firms pay an annual premium to a provider of surety bonds in Pennsylvania, and their clients are reimbursed in the event of any performance delay. This protects clients and gives construction firms a strong guarantee of contractual compliance.