What is a surety bond? If you are a construction worker or contractor in Pennsylvania, you must know the answer to this question. Surety bonds guarantee contract fulfillment in the event of a contractor default. A project owner will seek a contractor (called a principal) to fulfill a contract and that principal will obtain a surety bond from a surety company. If the contractor/principal defaults, then the surety company will be responsible for finding another contractor to complete the contract, or they will have to compensate the project owner for the financial loss incurred.
While Pennsylvania surety bonds do not directly protect or benefit the contractor, in many job assignments, the project owner will require that the contracting company and individual contracts carry this insurance. Simply put, Pennsylvania surety bonds guarantee that specific tasks are completed for the project owner.
According to the Small Business Administration, there are four types of surety bonds; a bid bond, payment bond, performance bond, and ancillary bond. Other types of bonds issued through Provident Protection Plus Insurance Agency include the labor & materials bond, and the maintenance bond. The type of Pennsylvania surety bonds you or your company will need will depend on the type of project you are involved in. It’s best to consult with a surety professional to determine what your needs are.
Do you really need surety insurance? This is perhaps the biggest question individuals have pertaining to surety bonds. Most companies and workers need license and permit bonds before they can get even their business license. In addition, construction professionals typically need contract bonds before they can work on publicly funded projects. Some may be hesitant to purchase surety bonds or fearful that the costs will be high. As far as what surety bonds cost, this will depend on a few factors; the bond amount, the contractor’s personal application, and the risk involved with the specific contract.
At Tri-State, we recognize that Surety Bonds in Pennsylvania are time sensitive and critical to the success of a contracting firm. We have access to surety companies throughout Pennsylvania, northern New Jersey, and New York that can provide you with cost-effective bond solutions as quickly as possible. Please contact us today at (888) 990-0526 to learn more about these services as well as our other Pennsylvania Business Insurance products.