Most contractors, land developers and foremen understand that being bonded is essential in order to compete in the Orlando’s commercial construction industry, but how well do you understand the process? Many professionals don’t, so here is a helpful guide to understanding surety bonds and the bonding process.
What are Surety Bonds?
Surety bonds are commonly defined as a three party agreement which guarantee to an obligee that the contracting entity will complete a project according to the terms specified in the contract and properly pay their bills and expenses. Surety bonds are essentially designed not to benefit the contractor, but to protect the project owner. While a contractor’s own business insurance policy is designed to help mitigate their own financial losses, surety bonds are a financial agreement between a business and a bonding company that transfer financial responsibility to the surety company in the event that something goes wrong in the business transaction.
It is important to note that unlike insurance claims, surety claims are not caused by accidents. Surety claims arise when a contractor is unable to fulfill their contractual requirements for some reason. In these cases the surety company is obligated to find another contractor to fulfill the contract or compensate the third party for their financial loss.
The Bonding Process
The process of getting bonded itself might seem a bit complicated. The first step of the process is to contact an agency or brokerage that specializes in securing Orlando surety bonds. The agent or broker will likely set up a meeting to discuss the specific needs of your business, before submitting a bond request to the specific surety company that they believe will best meet the needs and requirements of your business.
Finding the right surety producers is vitally important when seeking bonds in Orlando. Luckily, we can help. At Newman Crane, our surety specialists work closely with many local contractors and other business owners, to help them set up bonds that are carefully designed to cover their specific exposures. We are proud to offer a complete portfolio of bonding and business insurance solutions to operations throughout Central Florida. For more information, give our Orlando Surety Bond specialists a call today at (407) 859-3691.