Why Contractor Bonds Washington Professionals Carry Should Matter To Homeowners
Every time there is some kind of disaster in a community, that leaves a trail of property destruction, you will find unscrupulous individuals knocking on doors offering to repair homes and businesses. They are generally strangers to the owners, and expect to be paid before any work is done. Public officials warn Seattle, Washington residents to avoid getting involved in what are almost always scams. Along with credibility and reliability, real professionals have contractor bonds Washington homeowners can verify.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
The are several different contract agreements that cover different situations. The three issued most commonly are bid, performance, and payment. A bid bond ensures clients contractors will obtain performance and payment bonds if they are awarded the contract. The performance bond guarantees all work will be done as stipulated in the contract. The payment bond guarantees all suppliers and subcontractors used on the project will be paid in full.
There are other types of agreements offered by surety companies such as supply, maintenance, and site improvement. A subdivision bond guarantees that contractors will construct certain subdivision improvements, such as sidewalks, streets, and waste management systems, exactly to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
When contractors default the surety company has only a few options. They can pay the client the amount of money they lost. The company can negotiate with the client to rebid the job in order to complete it. Sometimes they decide to give contractors the capital they need to complete the work, with the agreement that the funds will be repaid with interest once the job is finished.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
The are several different contract agreements that cover different situations. The three issued most commonly are bid, performance, and payment. A bid bond ensures clients contractors will obtain performance and payment bonds if they are awarded the contract. The performance bond guarantees all work will be done as stipulated in the contract. The payment bond guarantees all suppliers and subcontractors used on the project will be paid in full.
There are other types of agreements offered by surety companies such as supply, maintenance, and site improvement. A subdivision bond guarantees that contractors will construct certain subdivision improvements, such as sidewalks, streets, and waste management systems, exactly to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
When contractors default the surety company has only a few options. They can pay the client the amount of money they lost. The company can negotiate with the client to rebid the job in order to complete it. Sometimes they decide to give contractors the capital they need to complete the work, with the agreement that the funds will be repaid with interest once the job is finished.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
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When you are looking for information about contractor bonds Washington residents can pay a visit to our web pages online here. More details are available at http://insurewa.com now.
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