Sponsored Ad: How A Surety Bond Works

A surety bond Maryland is a payment bond that protects an obligee in the case that a contractor defaults on their obligations. The obligations of the contractor are outlined in a contract including the work to be done, specifications for this work, the time frame in which the work is expected to be completed, and the monetary amount the contractor will be paid for the work. A surety, or the insurer who provides the surety bond Maryland, issues the bond upon confirming that the contractor is qualified to perform the work and that the time frame and monetary bid are reasonable.
Often an obligee will require a surety bond Maryland before they will sign a contract with a contractor. While the contractor pays for the bond coverage, the obligee is the beneficiary of it. The cost of coverage is worthwhile to a contractor as it enables them to enter into a contract for work with obligees that require a surety bond. The payment they will receive upon completion of the work should render the cost of the surety bond negligible.
In the event that a contractor does not fulfill their obligations in contract, the insurer who provided the surety bond has a few choices. The surety may select an alternative contractor to complete the work or appoint an alternate contractor to reconstruct the contract. He also has the option of issuing the payment needed to complete the defaulted contract. Alternatively, he can pay the amount of penalty outlined in the bond. Click here to learn more.

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