Homeowners can get careless after a major weather event has come through their community, and their homes are damaged. They don't always ask to see licenses and certifications before they agree to let a stranger make extensive repairs to their homes. Many don't even see potential problems when the stranger demands to be paid before doing anything. Seattle, Washington city officials know most of these strangers are con artists. Professional contractors don't knock on doors to offer their services, and when they are called upon to do so, can produce contractor bonds Washington surety companies will be able to verify.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
There are three basic types of contract agreements. One is required when contractors bid on jobs. This guarantees the bidder will provide the other two types of agreements once the bid is won. A payment bond guarantees contractors will pay all the subcontractors and suppliers used to perform the job. A performance bond assures the client that the contractor will do the job according to the contract they entered into.
Additional contract agreements include maintenance, supply, and site improvement. Contractors who construct waste management systems, sidewalks and streets in subdivisions must have a subdivision bond to guarantee all work is completed according to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
Contractors must meet certain standards before they are issued any kind of surety bond. They have to show they have the character to be trusted with contracting responsibilities and pay their bills promptly. A contractor must have the ability and capacity to perform the job. He or she has to have adequate equipment and the necessary staff to complete the work. A contractor must demonstrate financial security and reliability.
Surety companies don't have much recourse when contractors default. They can attempt to get the client's permission to rebid the project in order to complete it. They might decide it makes sense to fund the current contractors until the project is completed, at which time they will be reimbursed with interest, or they can just pay the client for the loss.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
There are three basic types of contract agreements. One is required when contractors bid on jobs. This guarantees the bidder will provide the other two types of agreements once the bid is won. A payment bond guarantees contractors will pay all the subcontractors and suppliers used to perform the job. A performance bond assures the client that the contractor will do the job according to the contract they entered into.
Additional contract agreements include maintenance, supply, and site improvement. Contractors who construct waste management systems, sidewalks and streets in subdivisions must have a subdivision bond to guarantee all work is completed according to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
Contractors must meet certain standards before they are issued any kind of surety bond. They have to show they have the character to be trusted with contracting responsibilities and pay their bills promptly. A contractor must have the ability and capacity to perform the job. He or she has to have adequate equipment and the necessary staff to complete the work. A contractor must demonstrate financial security and reliability.
Surety companies don't have much recourse when contractors default. They can attempt to get the client's permission to rebid the project in order to complete it. They might decide it makes sense to fund the current contractors until the project is completed, at which time they will be reimbursed with interest, or they can just pay the client for the loss.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
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