Bonding usually refers to a type of surety guarantee
that a specific project, service or act will be
financially covered if performance is not complete or
satisfactory. Some situations covered by bonding include
non-completion of a contracted project or service, cost
overruns, not meeting schedule, unsatisfactory quality
of work, damage to a customer's property while a project
is underway or injury to customer's personnel during
work.
For example, projects or services involving
construction, home health care, electrical contracting,
real estate inspection, gardening services, delivery or
moving services, etc.
Companies or individuals providing these services
customarily secure a bond from a bonding company,
assuring that if a customer's project is not completed
or is not deemed to have been satisfactorily completed,
the bonding company will reimburse the customer for
financial loss.
Bonding is required because some customers will not
contract work out to companies or individuals that are
not bonded.
Bonding fees are charged based on the type of business
and financial risk involved. Most bonding companies
have special packages for certain type of industries.
Pricing and Coverage is competitive. You should shop
around before deciding on a policy.
(2).
License
or permit bonds, which are required for many
occupations, including contractors.
Contract Bonds:
BID
BOND: An obligation undertaken by a bidder promising that the bidder will, if
awarded the contract within the time
stipulated, enter into the contract and furnish the
prescribed performance and payment bond's.
PERFORMANCE BOND: A bond which promises that the terms of a contract, or some of them, will
be performed by the Principal.
LABOR & MATERIAL BOND: A bond that guarantees an owner (or general contractor) at a
construction site that a contractor (or
subcontractors) will pay for labor and material to be
supplied. It protects the owner or contractor against liens from
subcontractors, suppliers or laborers who are not paid.
PAYMENT BOND: A bond which promises to pay some or all of the persons who provide
materials, labor, or services
for prosecution of a contract.
INDEMNITY BOND: A bond which promises
to reimburse an Obligee for loss incurred when a
Principal fails to perform
its contract or (in some cases) fails to pay for
material, services or labor used in prosecution of the
contract.
LICENSE (Permit) AND MATERIAL BOND:
A bond required of all licensed contractors in certain states
for the benefit of specific persons designated by
statue. Some of these states allow a cash deposit with
the state in lieu of a bond
