Construction can be an extremely risky profession, especially when working with subcontractors.
Although they are vital to completing a project quickly and efficiently, an unqualified subcontractor can have a negative impact on the entire project. To counter these risks, owners may require a surety bond to provide coverage for subcontractor failures. Surety bonds serve to:
- Relieve the project owner from financial loss as a result of liens for unpaid subcontractors and suppliers. They also protect taxpayer money for public projects.
- Ease the transition between construction and permanent financing by removing the threat of unresolved liens.
- Offer technical, managerial and financial assistance to move the project along and reduce the chance of default.
- Arrange for project completion if the contractor defaults.
Types of Bonds: