Choosing a bonding company with plenty of experience is the right move if you need a surety bond. This is why you might consider working with us at All n One Bonding and Insurance.
We have been helping people with their bonding and insurance needs for years and have an expert team ready to assist you. Check out our Home Page to get started.
If you are here to learn more about the specific advantages of working with an experienced bonding company, then keep reading.
#1: Surety Bonds Make You More Trustworthy
Probably the biggest reason to hire a bonding company is that surety bonds make your company more trustworthy.
How do they do this? Well, think of surety bonds as a form of insurance.
If you do not know what surety bonds are, they are legally binding agreements between three parties, which are used to ensure that businesses and individuals keep their obligations in any given arrangement.
The three parties involved with a surety bond are:
The Principal – This is you or whoever else needs the bond.
The Obligee – This is the party that demands the principal get the bond.
The Surety – This is the party that provides a guarantee to the obligee in place of the principal.
When you are bonded and insured, it means that you are required to fulfill your contractual obligations. Surety bonds also provide protection against fraud and other malicious acts.
Not surprisingly, this makes you far more trustworthy to potential customers and clients.
#2: Bonds Reduce Costs For Your Business On Multiple Fronts
Although surety bonds are powerful tools for guaranteeing the fulfillment of contracts, they are not the only tools available today.
Letters of credit (LOCs) are a popular alternative to surety bonds, but their popularity does not necessarily mean they are a better option.
In fact, surety bonds are much more desirable for businesses that are concerned with interest rates and high utilization fees, both of which are par for the course for LOCs.
Additionally, getting an LOC comes with several requirements, including using business assets as collateral. This and numerous other requirements make LOCs a potentially distasteful option.
Note: For those unfamiliar with the term “letter of credit,” it is a third-party promise made by a bank that a beneficiary will get paid once certain conditions are met.
While LOCs have been traditionally used by companies to secure contracts, many companies are now turning to surety bonds as a cheaper, simpler solution.
Naturally, providing a better solution is the first way that bonds save your business money.
The second way bonds help save you money is by protecting you from losses stemming from the cost of claims.
It is not unheard of that an obligee will make a claim against a surety bond for unfounded reasons. Sometimes the claims are legitimate, though. In either case, the surety bond is there to protect the company.
Now you might be wondering why an obligee would make a claim against a surety bond in the first place. Typically, disputes are either the result of poor performance or a disagreement over how the contract should be interpreted.
As an example, if a bricklaying company is hired to build a walkway but then leaves a part of the walkway unfinished due to inclement weather, the obligee can file a claim with the surety company to cover the cost of hiring additional help to complete the project.
This is just one example. A claim can also be made in cases of outright fraud or other malicious acts. For instance, if a company is working in someone’s house, and one of their employees steals the homeowner’s wallet, the homeowner can and most likely will file a claim against the surety bond.
The third way that bonds save your business money is by helping you avoid penalties, as surety bonds are required in many business sectors, and the laws surrounding their use can be quite severe. Companies that do not get the necessary bonds are subject to fines and criminal charges.
#3: Bonding Opens Up Business Opportunities
Did you know that the majority of construction jobs require that you get a surety bond? The same holds true for government contracts. Thus bonds are the key to opening many doors.
Bonds for commercial construction projects are especially vital since some events are impossible to predict. Case in point, in 2020, supply chains were essentially crippled due to Covid-19, leading to a host of problems for construction companies.
Performance bonds played an important role during this period, and they are increasingly important two years later in 2022. Surety bonds have been used for over 100 years, but with the pandemic, their popularity has increased more than ever.
#4: Surety Bonding Helps You Keep Your Project On Track
We think it is reasonable to assume that most contractors try to do a good job, which is why fraud and other malicious acts, while a very real concern, are probably not as much of an issue as companies falling behind schedule.
Fortunately, performance bonds are used to enforce project deadlines (not to mention other performance metrics), which is a huge reason to get them.
But there are other ways to keep projects on track besides meeting deadlines. This is why people use payment bonds, bids bonds, maintenance bonds, and contractor license bonds.
Payment bonds ensure that the appropriate parties in a transaction get paid on time, which is essential to keeping a project on track.
Bid bonds ensure that bids are made in good faith, are accurate, and will be followed up by a performance bond. While bid bonds do not have the same scope as performance bonds, they do ensure that bidders will complete the contracts they win—another element of keeping projects on the right path.
Maintenance bonds guarantee that maintenance and warranty upkeep of a project will continue for a predetermined period of time after a project has been completed.
While follow-up maintenance does take place after a project has been completed, it is still part of keeping a project on track, as the life of a project lasts as long as there is an engagement with the client.
Contractor license bonds are used to protect the public from faulty workmanship, fraud, or other malicious acts. For example, if a company is hired to fix electrical wiring in a high-rise apartment, getting a contractor license bond shows the local government that the company can and will do the job correctly.
Imagine what might happen on a complex project if there is no assurance that the job will be done right. It is rather easy to see why these bonds are important and how they help keep projects moving in a good direction.
#5: Surety Bond Companies Give you Access to Experts
Getting a surety bond gives you access to professionals (lawyers, engineers, accountants, and so on) connected to the surety, which is invaluable.
Being able to consult with the right people about your project at the right time makes all the difference, especially if you encounter unforeseen events.
If you need help getting a surety bond for your business, call us at Las Vegas: (702) 850-7711 or Memphis: (901) 306-8100. For years, we have been helping people get surety bonds that are uniquely tailored to their needs, and we are confident that we can find the right fit for you too.