Performance Bond Tips

Bond For Performance

Getting a performance bond is something that most contractors will have to do or should consider doing. These bonds not only protect the customer, but also protect the contractor. There are a number of tips that you should know about when it comes to performance bonds which ensure that you get the right bond for your business. There are also other tips on that you should also check out.

Some Performance Bond Forms Should Be Avoided

There are 3 categories of performance bond forms that you need to know about. The federal or state forms are generally fair and balanced making them some of the best. City and township forms are also good, but there are some exceptions to this so take the time to carefully read the forms. Private owners and GC forms are created by the company and are designed to be good for them. Some of the forms are good, others should be avoided so take the time to read through the forms.

Red flags to look for in forms include a bond amount that is more than the amount of the contract. If the form allows for claims to be made while the contractor is still on site or if there is a short specified time for the surety to commence with the completion of the contract. You should also look for additional bond payments that need to be completed.

Choosing The Right Surety Company

The company that provides your surety bond plays a large role in the transaction. It is important that you carefully consider which company you use. Expertise and responsiveness are important factors to consider when looking for a surety company. It is important that you use a reputable company for the surety.

Choosing the wrong company can lead to a number of issues. This is a trap that many people fall into particularly if they have bad credit. Bad credit can make it hard to obtain a performance bond, but you should never sacrifice the expertise of the surety company.

Choose An Independent Broker

Most people do not know who offers performance bonds and this is why you should consider hiring a broker. The broker will be able to find surety company which offers performance bonds and determine if you will qualify. However, you need to choose an independent broker instead of an affiliated one.

An independent broker will not be linked to a single provider and will look at all options for you. An affiliated broker will generally sell the services of a single surety company or state that they have the best options for you. Independent brokers generally look out for your best interests more than affiliated ones because they choose the best options and not the ones that they are affiliated with.

If you need to have a performance bond, you need to know how to choose the right provider and ensure you are getting the best bond for your business. When applying for the bond you need to take the time to carefully read the forms and consider the experience of the surety company.