• Why You Need a Performance Bond

    Why You Need a Performance Bond

    In the construction industry it is necessary not only to have insurance but you will also need to have certain bonds in place to do business.  One of these types of bonds that you should have is a performance bond.  Regulations like this have existed for years so no one gives much thought as to why we have them in the first place.  If you are trying to get a performance bond and are having trouble you may be wondering why you need a performance bond in the first place.  Let’s have a look at why they really are necessary.

    What is a Performance Bond?

    A performance bond is an instrument to ensure that everyone on a construction project has financial and legal protection.  If you have been in the industry awhile then you have probably heard of one or more cases of a construction company taking the money and not completing the job required.  Performance bonds protect against just such a case.

    The bond allows you to guarantee to the project owner that you will in fact complete the job that has been negotiation.  The performance bond holds you accountable and should the unthinkable happen and you can’t complete the project then the surety company will step in.  The surety company will either hire another contractor to complete the work or compensate the project owner for their losses.  On occasion the surety company will act as an intermediary to make sure that deadlines and milestones of the project are being met.  Here is a closer look at how they came to be.

    Is a Bond Really Necessary?

    The short answer is yes.  The much longer answer is that there are local, state and federal laws in place that make performance bonds necessary to do any work on public projects.  Bear in mind you will also need to get payment and bid bonds as well.  When it is taxpayer money on the line then it is even more important to hold the contractor accountable in getting the project done and that there aren’t endless delays and cost overruns.  Today even construction projects involving private ownership will want the security and protection that comes with a performance bond.  Put yourself in the customer’s shoes they want every guarantee possible that the project will get done.  Not only that, there will be banks and lending institutions that will require them.

    Don’t view a performance bond as a necessary evil but rather an investment in your business.  It shows your clients that you are a serious player and you stand by your word to get their projects done.

  • Why Contractors Need Liability Insurance

    Why Contractors Need Liability Insurance

    What is insurance?

    Insurance refers a way of protection from different types of losses. The person or company which provides insurance is known as the insurer while the person who is protected by the insurance is called the insured. The contract between the insurer and the insured is called the insurance policy. Liability insurance is a type of insurance that protects the insured against liabilities brought about by either lawsuits or similar cases. It protects everyone concerned if there is an accident on a building site. For contractors, despite putting in place all the necessary precautions, there is always a risk of damage, either to a building or even a third person in their projects.

    Protecting Your Business

    A liability policy or insurance will protect a contractors business. Lawsuits tend to be very much financially draining. It is the purpose of a liability insurance to ensure that in case of any claims against the insured contractor, he or she is not financially responsible for compensation. Liability insurance will also protect a contractor in case in the course of construction, another contractor is affected. This can happen in different ways even through injuries to workers associated with another contractor. Liability insurance covers any losses and expenses that may arise in case the affected contractor files a lawsuit.

    Minimizing Risk

    Construction involves a lot of risks to the workers and builders.  Construction sites can be dangerous places no matter how many precautions that you take.  When a worker is injured or even killed on the job, liability insurance kicks in to offset the financial portion of the accident.  Nobody wants accidents to happen, nonetheless they do and liability insurance is there to protect the contractor and everyone else when they do.

    Most construction clients know the risks involved in construction and most of the times they require their contractors to have with them proof of liability insurance cover before any construction contracts are awarded

    It is not just recommended that you have liability insurance in fact it is a law for a contractor to a liability insurance coverage. This is especially true for contractors who work for, in or with the government on any of their projects and it protects them from losses from lawsuits involving either the public or even the government itself.

    It is therefore very advisable for every contractor to ensure that they have a liability insurance coverage no matter what small your company may be.