Posted on: August 21, 2014 by titan-goodrich
Most contractors understand that in order to succeed in the commercial construction industry they need to be bonded, but how many contractors fully understand what bonding means? Being bonded simply means that a contractor has attained a set amount of financial security to protect not the contractor, but the other parties they are working with. While a contractor’s insurance policy is designed to help mitigate their own financial losses, surety bonds are funds set aside for the project owner, subcontractors and other parties in the event that something goes wrong in the business transaction.
Essentially, a surety bond ensures contract completion should complications arise leading a contractor to default. If a contractor is unable to fulfill their contractual requirements for any reason, the surety company is obligated to find another contractor to fulfill the contract or compensate the third party for their financial loss.
There are four main types of surety bonds: bid bonds, payment bonds, performance bonds, and ancillary bonds.
Any federal construction contract valued at $150,000 or more requires contractors to be licensed and properly bonded when bidding or as a conditions of contract award. Most state and municipal governments also have similar requirements. Bonding requirement have also been widely adopted by many larger private projects as well.
At Goodrich & Watson, we offer many types of VA Surety Bonds designed to provide additional financial support and protect your clients in the event that you are unable to meet your contractual obligations. In additional to our Virginia construction clients, we also provide VA Surety Bonds to new business owners, architects and engineers, design firms, and suppliers of all kinds, and many other business operations. Along with protecting your clients, we can also help protect your assets through our comprehensive portfolio of Newport News business insurance solutions customizable to fit the exact needs of your operation. Give us a call today at (888) 829-5004 to learn more about all our offerings.