Construction of buildings for commercial or residential purposes requires the help of good contractors.

Construction of buildings for commercial or residential purposes requires the help of good contractors. However, many contractors today do not work according to customer specifications, or indefinitely delay work. This causes losses to both parties, and reduces consumer confidence in builder. However, if you (as a contractor) take a contractor bond from a credible bonding company, you can assure the customer that the work will be completed on time, and comply with their expectations.

A Contractor Bond involves three different parties. The first party is the consumer, the second party is the contractor, and the third party is the company writing the bond. A Contractor Bond is an assurance to the consumer, from the bonding company, that the work will be completed and the vendors paid, in case the contractor is unable to do the same. Such a bond also covers things like damage to the property – whether caused by negligence on your part or accidentally. Contractors that are bonded gain a competitive advantage in the area of consumer confidence. Such a bond shows the consumer that you are financially able to obtain the bond, and interested in the wellbeing of their project.

There are many kinds of contractors bond. One of the more popular types is the bid bonds. There is nothing very unique about this bond, except that you need it while undertaking government projects. A project owner who requests a bid bond wishes to ensure that you do not entertain any frivolous bids. The bid bond can be converted to a performance bond on awarding of the project. Performance Bonds make sure that the project is completed according to the expectations of the consumer. A performance bond requires that the contractor has collateral to back up the requirement of the binding company. Performance bonds cover 100 percent of the contract price and can replace the bid bond once the contract is awarded. A payment bond is more concerned with paying off the vendors in case the project is not completed on time. It is a guarantee, normally 20% of the bid amount, submitted by the contractor that the vendors will be paid off by the bonding company in case of default on the contractor’s part.

If you wish to protect your company and employees against accidents and unplanned situations, you should buy Texas contractors insurance. Such insurance is especially useful for specialty and sub contractors, who are at greater risk of facing losses due to unforeseen circumstances. There are many kinds of insurance for builders – workers compensation insurance, contractor’s liability insurance, commercial auto insurance, property insurance etc. There are many online insurance firms that provide such insurance. They have certified builders insurance specialists, who will work directly with you to plan the right insurance policies for your business needs. These firms provide insurance solutions both for a specific project, and to cover your entire organizational plans over the next year or two. Thus, with the help of a contractor bond as well as builders insurance, you can definitely have a successful construction business.

Resources:
Shawn Wise is the author of this article on Contractor Bonds.
Find more information on Contractor Bonding here

Author: Skip Wise

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