Humor For Your Health

Timing is everything. Here then is the chain of events in the life of a bond. We are describing a bid bond required to accompany a contractor’s proposal to perform public work.Unfortunately, it is common for contractors to wait until they decide to bid a specific project before attempting to arrange their bonding. Seems like the bid date is always “tomorrow at 9:00 AM!” This is not the best way to proceed. A bonding facility should be arranged prior to the need for that first bond. If it’s possible, allow days or even weeks for the initial fact gathering and underwriting. During this period, a General Indemnity Agreement will be executed by the applicant company, its owners and spouses. This is a hold harmless agreement that protects the Bonding Company from any loss or expense through having written the bond(s). It is one reason Bonds are not Insurance. employment law services Next, the specific project is considered. Hopefully it is within the financial capabilities and expertise of the applicant contractor. Sureties normally will not give a bid bond unless they are also willing to provide the specified Performance and Payment Bond required of the successful bidder.If the client wins the project, an award letter triggers the need for issuance of the Performance and Payment Bond. Normally there is one premium charged, regardless of the contract term (no renewals).After acceptance of the completed project, the Performance and Payment Bond is released and a Maintenance Bond may be required for 1 or 2 years. An additional premium may be due. Some sureties give the first year free following their Performance Bond on the same contract.Additional bonded projects are handled more quickly. Only a specific project evaluation is needed.