Posted on: 29 May 2017
If you have recently started your own small construction company, you may have questions about being bonded. If so, read through the following three things you should know about obtaining contractor bonds for your new construction business.
Reasons You Should Be Bonded
There are several reasons you and your construction company should be bonded, the first of which is that it is required by law in most states. A bond is a legally binding assurance to your clients that you will complete the project as dictated in the contract. If something goes wrong, however, the bond protects them from physical or legal damages.
A contractor bond does not only protect your client, however. If an injury happens on the job or property damage occurs, the company through which you obtained the bond handles the financial matters, using your bond and the premiums to pay the damages instead of having it come back on you personally.
Cost Of Having A Contract Job Bonded
Unfortunately, having a contract job bonded is not always cheap, especially for a small construction company that is just starting out. You may have to pay a premium that is a percentage of the estimated cost to complete the job.
As time goes by and you prove yourself as a successful contractor, these premiums can go down. You can also work with a contractor bonding financial agency to see if they would be willing to work with you on your premiums during the start-up phase. Some of these agencies can and will help you out to get the cheapest premium possible.
Consequences For Not Being Properly Bonded
Another important thing you need to know about getting a contractor bond is the consequences of not doing so. Since the bond protects not only your company during a contract job but also your client, you could face heavy penalties for not having the contract bonded.
For example, you could face financial fines, especially in the event of a default in the contract. And, if an accident occurs on the job, you could be personally held liable for the damages, as well as risk losing your contractor's license.
After reading the above information, you may still have questions about getting a bond for your construction company. If so, you may want to speak with your financial institution who specializes in contractor bonds so they can answer any concerns and help you through the process of becoming properly bonded.Share