Surety companies ensure contractors will meet their responsibilities on projects, whether it’s completing the work, honoring their warranty, or paying their suppliers and subcontractors. It’s in the principal’s best interest to avoid issues that may lead to a bond claim, as they will have to pay the costs, and claims damage their reputation. If there’s a dispute on a bonded project, the obligee can file a claim with the surety company, seeking reimbursement for damages they’ve suffered. The surety company investigates the claim, and if it finds that it’s legitimate, it will pay out funds to cover the claim.Īfter the claim is settled, the surety will then collect the funds it paid out from the principal who purchased the bond. The types of bonds that may be required on a project will depend on the type of work being done, who it’s being done for, and jurisdictional requirements. Some protect suppliers from non-payment, others protect owners during the warranty period. The obligee is the one that’s being protected by the bond, the principal is the party that purchases the bond, and the surety company is the one who pays if a claim is made and proven.īonds can cover many different facets of performance on a construction project. There are three parties involved in each bond - the obligee, principal, and the surety company.
Don’t forget to protect your bonding capacityĪ construction bond is similar to an insurance policy - it protects the parties to the bond in case the work isn’t completed, payments aren’t made, or repairs aren’t made during the warranty period.Provide proper financial statements and reports
ION BONDING CAPACITY MEASURE DAILY THEMED CROSSWORD HOW TO
How to increase your company’s bonding capacity.Factors that determine bonding capacity.
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