A surety bond guarantees that a contractor will perform the construction project according to the terms of the contract, on time and at the agreed upon price. This allows for competitive bidding, which ensures that options are available for those needing a contractor’s services. It would be difficult, if not impossible, for a contractor to secure jobs without being properly bonded, so a bidder must provide surety bonds prior to taking on most projects.
While some critics believe it is wrong to deny anyone a bond, these critics are right when they suggest that surety bonds should be given to responsible businesses that will comply with the needs of the surety company as well as their clients. You can obtain bonds through your Insurance Agent in New Mexico.
Bonds are intended to satisfy the needs off all parties
The fact is, not every contractor is qualified to perform every job that might be made available to him or her. Bonds are provided only to those who are able to demonstrate, to the surety company’s satisfaction, that they’re qualified to do the work. Surety bonds are a financial guarantee of the quality of the work being performed. Since bonds function in many different ways, the type of protection a bond offers will vary depending on the specific type of bond the individual or business has purchased.
While understanding the bonding process can seem complicated or confusing for many unfamiliar with how it works a little research could go a long way in protecting valuable investments, including those of clients who put their trust in those making these important decisions.
State government requires a wide array of individuals and businesses to become bonded. The point is to discourage anyone from participating in fraudulent activities. However, if the principal (aka the “bonded entity”) is unethical in any way, then the consumer (aka “the obligee”) can make a claim against the bond. Once the claim is confirmed, the surety company compensates the obligee for damages, leaving the principal paying retribution up to the bond’s full value.
This process provides certain protections and restrictions designed to make sure that projects awarded to construction companies get completed as stated in contracts and that no one is victimized by unscrupulous business practices. Speak to an Insurance Agent in New Mexico about all of your questions regarding surety bonds.