Top 3 Surety Bond Misconceptions
Posted on: June 4, 2015 by titan-goodrich
Earlier this year, we discussed the basics of Virginia Construction Surety Bonds, and how they are essential to the success of the project and peace of mind for project owners. Providing a solution that guarantees the project will be completed according to time frame and specifications while protecting the project owner from a potentially huge financial loss makes these bonds ideal. Obtaining Virginia Surety Bonds will ensure the overall positive reputation and success of your business. Now that you understand what a surety bond does, let’s talk about the common misconceptions associated with them:
- Surety Bonds Don’t Actually Pay for Losses- According to The Surety and Fidelity Association of America, surety companies have paid an estimated $13 billion in claims between 2002 and 2013. What’s more, surety companies are also known to negotiate conflicts before they become losses and often finance contractors when going through a financially difficult time.
- Bonds are Expensive- Bonds typically run between 0.5% and 3% of the contract price which varies depending on the size and the type of project. Bear in mind the added benefits that are included with surety bonds such as extensive prequalification, financial protection, and claim service. Surety bond benefits also include finding a replacement contractor if needed and monitoring the contractor’s work as he or she progresses.
- Project Owners Can Prequalify on Their Own- Sureties establish long standing relationships with banks, contractors, attorneys, etc. and have access to confidential information that would otherwise be withheld. Further, sureties analyze the contractor for the 3 C’s: Capital, Capacity, and Character. In other words, these bond companies determine whether the contractor has enough money and capability to complete the project dutifully and honestly.
At Goodrich & Watson, we offer a variety of surety bond options tailored to meet your needs for financial backup, boosted reputation, and timely project completion. We also provide custom Virginia contractors insurance to coincide with your coverage demands. Give our specialists a call today at (888) 829-5004 to learn more about our solutions.
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