Surety Bonds Protect Everyone

Surety Bonds Protect Everyone

Surety Bonds Performance and Payment

Bidding on a government contract? Looking for more business from the private sector? Just starting your company and looking to provide potential clients with reassurances about your viability? By offering surety bonds performance and payment, you send the important message that you are reliable, trustworthy, and financially viable.

A Surety Bond is Not Insurance

Bonding may sound a lot like insurance, and in fact, many surety companies are subsidiaries of insurance companies. But there are several differences between them, such as who pays the premium and how many parties are involved. The biggest difference, however, is this: Insurance is designed to compensate for a loss; a surety bond is to prevent loss from happening in the first place. You need insurance to protect you; your client needs your surety bond to protect them.

If It’s Optional, Do It Anyway

In certain situations, such as bidding on public works projects, surety bonds are required. When the project owner is the government (usually seeking the lowest bidder), it needs to be reassured that the contractor is dependable and capable of fulfilling its commitments. This occurs in the form of surety bonds performance and payment.

But in many cases in the private sector, bonding is optional. When this happens, offering a bond may set you apart from the competition. It tells your potential clients that if something goes wrong in the project, for whatever reason, they will not be left in the lurch. Especially in a situation where you are in a competitive bidding process, a surety bond provides reassurance and therefore, substantially enhances the possibility of your getting the work.