A bond is a financial guarantee usually in regard to the performance work.
Contractors doing work for municipalities or government agencies often must obtain a bond that guarantees that work will be completed as agreed. If there is a default, the bonding company responds with a payment.
Unlike insurance, a bond requires that repayment be made to the bonding company after a loss. So, if there is a bond claim the contractor will have to repay the bonding company for the loss.
If there is a chance you will need a bond in the next year or so you should begin now to establish a relationship with a bonding company. You will need to provide financial statements, a list of work in progress, and perhaps personal financial statements. You bond underwriter will act like a banker in reviewing your financial strength and experience.
Work with your insurance adviser early to lay groundwork for your future bonding needs.
Contractors doing work for municipalities or government agencies often must obtain a bond that guarantees that work will be completed as agreed. If there is a default, the bonding company responds with a payment.
Unlike insurance, a bond requires that repayment be made to the bonding company after a loss. So, if there is a bond claim the contractor will have to repay the bonding company for the loss.
If there is a chance you will need a bond in the next year or so you should begin now to establish a relationship with a bonding company. You will need to provide financial statements, a list of work in progress, and perhaps personal financial statements. You bond underwriter will act like a banker in reviewing your financial strength and experience.
Work with your insurance adviser early to lay groundwork for your future bonding needs.
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