Surety Bonds That Work For You
Whether you run a small contracting firm or represent an established business in the construction industry, you want to work with experienced professionals who can help find and implement solutions for any surety bond requirement. With Provant, you get that — and more.
Provant’s surety bonding services are designed to meet your needs, whether it’s for a single project or ongoing relationship. We also provide expert advice on how to manage your business risk so you can focus on what matters most — delivering results.
What is Surety Bond Insurance?
Surety bonds are financial guarantees that help parties fulfill contractual obligations.
There are three parties involved in a surety bond:
- The Principal – the party who is covered and obligated to fulfill the terms
- The Obligee – the party who requests the guarantee
- The Surety – the party that issues the bond.
Types of Surety Bonds
Surety bonds are a type of insurance that protect the interests of the obligee and the principal. There are different types of surety bonds, which work the same way but for different industries or professions.
With any surety bond, if the principal fails to comply with their agreed-upon terms, then the obligee may file a claim on the bond. The surety is then obligated to pay the proceeds of this claim to cover losses.
COMMERICIAL SURETY BONDS
When you’re a small business, every dollar counts. That’s why it’s important to make sure your company is as competitive as possible when seeking contracts. If a government agency is hiring contractors to complete a project, they commonly request that the contracting company provide surety bond insurance. This extra level of assurance helps them feel confident in their choice and gives them peace of mind that the project will be completed on time and on budget.
But surety bonds aren’t just for government contracts—they can also help you protect your business from theft, fraud or embezzlement by providing an additional layer of protection for your company.
If you’re in the business of providing services, there are a number of federal and state requirements that mandate surety bond insurance.
Depending on the industry, you may need licensing or permit bonds to assure clients that you will perform your job ethically and in accordance with the rules of your profession. The laws vary, so it’s best to check the specific laws in your state for licensing and permit rules.
The most common type of commercial bonds are License and Permit Bonds. These are required by the federal, state, or local government as a condition to engage in a business activity or in the granting of a permit to exercise a particular privilege. This guarantees compliance with statutes, ordinances, and department rules.
A construction bond is a type of surety bond used by investors in small or large construction projects. These bonds are used to ensure different aspects of the construction projects are paid by all parties.
Approximately two-thirds of all insurance bonds written are issued to construction companies. There are several types of surety bonds applicable to the construction industry.
The most common types of bonds for contractors include:
- Construction Performance Bond – guarantees that the contractor is responsible for completing the project on time and within budget. If they fail to do so, they will be held accountable for any losses suffered by their client.
- Payment Bond – guarantees that contractors will be paid by their clients on time and without delay. It also protects subcontractors from being left unpaid if a contractor goes out of business or files for bankruptcy before completing work on a project.
- Bid Bond – guarantees that the principal can and will meet the specific requirements in the bid. Typically these are combined with Performance Bonds to ensure the completion of a project.
- Maintenance Bond – covers the materials and workmanship after project completion for a period of 2 years.
- Supply Bond – guarantees that a supplier will deliver the promised materials for the construction project.