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Three Surety Bond Misconceptions
Posted on: December 7, 2015 by Newmark Insurance
Earlier this year, we discussed the different types of surety bonds and their importance among contractors. As Surety Bonds are an essential component to their business, let us take a closer look at the common misconceptions surrounding them.
Surety Bonds Don’t Cover Losses- Surety companies have paid an estimated $13 billion in claims between 2002 and 2013, according to The Surety and Fidelity Association of America. In addition, these companies have been known to assist in negotiating conflicts prior to them resulting in loses and also assisting contractors when they experience rough patches.
Project Owners Can Qualify Independently- A common belief is maintained that project owners don’t need the assistance and protection of surety bonds. However, surety bond companies are able to prequalify contractors and access information that would otherwise be impossible. What’s more, they have developed relationships with reputable banks and contractors alike. Bear in mind that they are also in a better position to determine if the contractor in question is equipped with the three C’s: Capital, Capacity, and Character.
Bonds are Too Expensive- Bonds traditionally cost an estimated 0.5% to 3% of the total contract price, depending on the size of the project. In addition, bonds provide financial protection, claim service, and prequalification for contractors. These companies also monitor the progress of the job and can provide a replacement contractor should the original one fail to meet requirements.
At NewMark Insurance Services, we provide an assortment of surety bonds that can be tailored to meet your specific needs. Our packages seek to boost reputation, provide financial security, and ensure project completion in a timely manner. For more information, we invite you to contact our specialists today at (855) 777-6549.