Choosing Business Goals

Surety Bonds For Your Construction Company

1 February 2019 by Wade Wheeler

The construction industry can be lucrative, but it can also be volatile. Contractors are at the mercy of their clients in many ways. Customers can withhold payments and throw a wrench into the day-to-day operations of any construction company.

You can prevent possible problems by investing in surety bonds. There are a couple of different types of surety bonds that will prove useful when disputes with clients arise in the future.

Performance Bonds

Most states require that construction companies carry a valid performance bond at all times. These bonds are designed to protect both clients and the construction companies they hire to do work on their homes.

The bond issuer acts as a third party in the contract between contractor and client. If the work done by a contractor doesn't meet the client's approval, then the client can file a claim against the bond. If a client doesn't make payments on time, the contractor can use a performance bond to secure payment.

Be sure that you have a performance bond whose terms offer maximum protection for your construction company.

Maintenance Bonds

Another type of bond that you will want to consider for your construction company is a maintenance bond. You want potential clients to know that you are confident in your ability to complete construction work skillfully and with integrity.

A maintenance bond acts as a warranty against defects in both craftsmanship and materials for a set period of time. Should a client experience any problems with the work your construction company completed during this prescribed time period, a claim can be made against the maintenance bond.

Offering this type of guarantee lets future clients know that you stand by the quality of your work. A maintenance bond could mean the difference between securing a large project and being passed over for another company.

Surety bonds are designed to help foster a trusting relationship between contractors and their clients. Both performance bonds and maintenance bonds offer an added layer of protection for you and your clients. If either party violates the construction contract, a bond can step in and help make things right. Work with a reputable bond issuer to determine which surety bonds are best suited to protect your construction company.

Having these bonds in place before bidding on your next project will help increase your trustworthiness for potential clients. Surety bonds are a worthwhile investment for any serious contractor. Contact a company, like NFP, P & C, Inc., for more help.

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