Are surety bonds used in the construction industry?

September 3, 2009

Surety bonds are frequently used in the construction industry with a surety bond for the construction contract being the most obvious. A surety bond for subcontractor payments called a contractor bonds may also be required. The other class of surety bonds is called commercial bonds; these bonds are for industries and services which do not have a contract based business mode. Examples of commercial bonds include: notary bonds, lottery bonds, janitorial service bonds, insurance broker bonds, telemarketing bond, etc. Local and State governments require businesses to obtain the appropriate commercial surety bonds in order to conduct business. Commercial bonds are typically a permit or license bonds. These differ from professional licensures which provide a level of assurance against fraud and misconduct of professional service providers.Similar to the surety bonds for contracts, the commercial bond issuer has the responsibility to settle disputes between the principal party and the customer. The business model is similar. The bond issuer provides surety instruments in exchange for a premium which is paid on a regular basis.

Surety Bonds Assistance for Small and Disadvantaged Businesses

Changes In The Surety Bond Market

What Builders Risk Insurance Will and Will Not Cover

What is Builders Risk Insurance and Why Do I Need It?

Filed Under Business Tips, Finances