What Are Construction Surety Bonds?
The construction industry regularly involves large agreements between contractors and their clients, and clients often want reassurance that contractors will uphold their portions of these agreements. Construction surety bonds are one way contractors provide that reassurance.
Construction surety bonds may be more like lines of credit than traditional insurance policies, but they’re usually offered by insurance companies. A number of insurance companies offer them.
What Businesses Need a Construction Surety Bond?
Most businesses in the construction industry can benefit from having a surety bond. This includes (but isn’t limited to):
- Tradespeople (e.g. electricians, plumbers, etc.)
- Small general contractors and home builders
- Contractors dealing with environmentally hazardous materials (e.g. asbestos)
- Constructions companies specializing in roadways and utilities
How large a bond these businesses need depends on the scope of their project. All of these businesses, however, work on sizeable projects where clients may request a bond as reassurance.