Bond Basics: Exploring Different Options

Bond Basics Exploring Different OptionsLake Tahoe Bonds are an essential component for many businesses. While these products differentiate from standard insurance products, they provide peace of mind for both the owner of the job and the contractor or provider who seeks to complete it. Let’s take a closer look at the various types of surety bonds and the function of each.

So, what is a bond exactly? Gen Re defines them as a three-party contract comprised of the Surety, the Principal (contractor) and the Obligee (owner) in which the Principal promises to perform in accordance to its contract obligations.

Bid Bond- This bond ensures the bidder on a contract will enter into the contract and furnish the required payment and performance bonds if awarded the job, according to the U.S. Small Business Administration.

Performance Bond- This ensures financial protection to the owner of a project if the contractor fails to meet specific contractual deadlines and standards. If the result is a terminated contract, the surety bond will provide monetary assistance for the owner.

Payment Bond- This bond assures that all materials, workers, and contractors are paid.

Ancillary Bond- This component assures that other components of the job which are not directly performance related are still achieved adequately and promptly.

Bonds are an integral part of any construction or contractor profession. As many jobs are acquired through the bidding process, having proper bond insurance is critical to obtaining business. Federal laws maintain that any contract exceeding $150,000 requires a surety bond upon bidding. In addition, service and supply contracts are also included in this law.

At Cal-Nevada Insurance Agency, we strive to provide quality solutions for your business. Our bonds are expertly crafted for your specific needs to ensure your success, reputation, and longevity. For more information about our products, contact us today at (866) 670-5948.