You may have heard the term bonded in advertisements for construction companies. You may have even wondered what that meant. If you are working on any form of construction, you should know all about bonds.
What Is a Surety Construction Bond?
A bond is a contract or agreement between the construction company, suppliers, clients, or bonding agencies who have a stake in the project. All bonds serve as a form of protection on the parties’ investment.
What Does a Construction Bond Protect?
There are different types of construction bonds, each serving a different purpose or interest in a project. The construction bonds protect:
- Project developers for protection on a bid
- Government agencies for protection against defective work
- Developers for protection against defective materials
- Subcontractors for protection against not being paid for the work
- Suppliers and developers against nonpayment for materials
Although there are others, these are the main types of construction bonds.
Why You Need a Bond?
Developers, construction companies, and other agencies need bonds for a variety of reasons. One of the main reasons is protection, but in some cases, they are required by law. They often act as a form of guarantee or warranty against defective work or materials.
Construction bonds are an essential part of operating a construction business or hiring a construction company. They protect all of those involved in the transaction and save you time, and money should a project or bid go wrong.