Category Archives: Surety Bonds

What’s the Difference Between Contractor Bonds & Insurance?

Contract workers are required to attain a license or permit bond from a surety bonding company, such as ourselves. They are also required to obtain worker’s compensation and liability coverage for their crew. The difference between bonding and insurance can be a bit confusing and unclear. Read on to learn how to decipher between the two.

What is Workers Compensation and Liability Insurance?

Worker’s Compensation is a type of insurance policy that guarantees the injured employee to receive medical care, disability/rehabilitation, and have expenses related to the injury covered. Typically, while having worker’s compensation coverage, employees have their right to sue for negligence waived.

Some employees may opt-out of their employer’s worker’s compensation policy. Certain employees may have a pre-existing condition or injury not covered by worker’s compensation. In either of these cases, it’s important to maintain liability coverage, as the employee may file suit against the employer. Liability insurance protects employers from instances listed below.

Workers’ Compensation & Liability Insurance Covers:

  • workplace injuries
  • injuries occurring during work-related travel
  • injuries due to workplace violence
  • natural disasters
  • illnesses
  • fatalities

What is a Contractor License Bond?

Each state holds its own requirements for permitted construction work, but all require at least a permit bond and/or a license bond. Contractor license and permit bonds are a type of surety comparable to a line of credit and allow the contractor to perform work within that jurisdiction. The bond is an agreement between the contractor, the state licensing agency, and the surety company stating that the principal contractor will provide services in accordance with state and federal law (adhere to building codes, etc.)

If the contractor fails to fulfill the terms, a claim can be made against the bond, and the surety will investigate. If the surety concludes that the claim is legitimate, it will usually pay compensation to the claimant, up to the bond’s total value. The contractor remains liable for their obligations and must repay the surety, even though the surety company initially covered the claim. Therefore, these types of bonds are associated to a line of credit rather than insurance.

Summary of Contractor License Bonds, Workers Compensation, and Liability Insurance

  • A contractor license bond protects the contractor’s clients and the public. It’s a line of credit that, if used, requires the contractor to repay any compensation the surety had to extend out to the claimant(s).
  • Worker’s compensation is an insurance policy that covers employees in cases of work-related injuries.
  • Employer liability insurance protects/covers employers from lawsuits that may arise in cases of work-related injuries.

Understanding the requirements for permitted construction work can be complicated. At Construction Bonding, bonds are all we do. Call us today for professional, straightforward, and sound surety advice.

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com

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The Spring Bid Season is Fast Approaching; Obtain the Surety Bond You Need!

Your bond experts are standing by, ready to assist contractors in pre-qualifying their bond applications for municipalities, schools, and public works that will be opening soon. At CBS, our specialty is to help you get the construction bonds you need. We’ll decipher the paperwork and make recommendations to place you on top!

Construction Bonding Specialists offers a variety of surety bonds, including:

✔ Bid Bonds

✔ Performance and Payment Bonds

✔ License and Permit Bonds

✔ Maintenance Bonds✔ and more!

CBS knows what is required to expedite the process. We have years of experience in the industry, giving us an advantage you can count on. Whether you need a simple bond or something more complex, our professionals are ready to assist you.

BONDS ARE ALL WE DO!

Apply Now!

For more information about our bonds visit our website or call 248-349-6227

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

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Efficient Surety Bond Producers

Surety bond producers are the middle people between the surety company and the contractor. Construction bond producers understand the surety and construction industries and are crucial when seeking to acquire surety credit.  

The surety bond producer can make or break an active contractor’s surety as they determine approval, bond size, and collateral obligations. They also act as the expert or guide for contractors aiming to secure a bond by working with surety companies on their behalf.

Some characteristics of efficient surety bond producers include the ability to create lasting relationships, awareness of local and national markets, accounting and financial proficiency, willingness to write within the market, capacity to review statements and bond applications, obtaining the most optimal rate, and suggests evaluations honestly.

Underwriters who have good relationships with producers are more likely to work with them to brainstorm new ideas or undergo risks they might not otherwise undertake with lesser-known producers. Since surety bond producers must thoroughly understand contracts and construction law, they should also be informed on local and national construction markets.

Aptitude in accounting and finance is of utmost importance when it comes to surety bond producers. Adequately evaluating accounts before underwriters see them is imperative to success. Professional producers do not engage with applications that will be declined. Reviewing financial statements and other bond application requirements is crucial, as the surety bond producer will also be mindful of the applicant’s credit.

Are you looking for a producer who can deliver? You’ve come to the right place! Contact the experts at Construction Bonding Specialists today to get started.

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.

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Interesting Surety Facts

Surety bonds are contracts between three parties: the principal, surety, and obligee. These bonds have many characteristics you might not know about. Read on to learn more about surety bonds.

Ancient History
Surety bonds are ancient, mentioned in the Code of Hammurabi (circa 1754 BC), the Bible, and the Quran. To construct buildings, walls, roads, etc., ancient Roman ordinances required a surety. During the late 19th century, corporate surety began throughout America.

Trillion-Dollar Industry
The surety business brings in roughly $9 trillion worth of safety, while the direct written premium is more than $6 billion annually. The average loss ratio for surety carriers is relatively low, which makes it profitable as well.

Credit, Not Insurance
Most surety specialists consider underwriting a form of credit rather than insurance to focus on prequalification and selection rather than risk. Surety bonds require risk to remain with the principal. The bond protects the obligee. State insurance regulators have a say in surety bonds, though the risk is not transferred to the insurance company. Instead of premiums coming out from policies (as they do in insurance), surety bond premiums paid are “service fees” used toward the company’s financial support and overall guarantee.

Legislation
Federal, state, and municipal governments have formed an arena for fidelity and surety bonds by way of statutes, regulations, ordinances, and court rules. In 1894, the United States Congress passed the Heard Act, which requires contractors to acquire surety bonds for public projects. In 1935, it was replaced by the Miller Act, which protects the contractual rights of labor and material for public works. Roughly all state, county, and municipal governments implemented similar legislation (also known as Little Miller Acts) as well. 

Law Enforcement
Frankpledge, an early form of joint suretyship, was used primarily in medieval England to force alleged criminals to appear in front of a judge. Tithings, or groups of ten households, were responsible for forcing one of their members to go to court if they were criminally charged. If the accused did not show up to court, the entire group could be fined.

To apply for a surety bond, reach out to Construction Bonding Specialists today!

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of experience, we work to discover solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit our website today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.

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The Construction Season Is Upon Us

Get Your Bid, Performance, or Payment Bond Now!

Bid Bonds

Bid Bond is a prequalification indicating that the contractor is bondable for the performance and payment bond should they be read low or chosen by an Owner/GC/CM that they will enter into the contract and provide a Performance and Payment Bond.  

Performance Bonds

Performance Bonds offer assurance that the bonded contractor will perform according to all contract documents.

Payment Bonds

Payment Bonds offers an assurance that the bonded contractor pays for all materials and labor associated with the documents related to the contract.

While each of these bonds have specific criteria that has to be met to secure them, Construction Bonding Specialists, LLC knows what is needed up front to help expedite the process.  With our years of experience we know the best way to approach a surety to present a solid opportunity.  This is because we specialize in assisting contractors when any of these types of bonds are needed.  We can handle everything from simple/small bonds to more complex/larger bonds.  We’ve virtually seen it all.

The specialists at Construction Bonding Specialists, LLC can assist you with your application(s) today. Call or visit our website to learn more information.

BONDS ARE ALL WE DO!

For more information about our bonds visit our website or call 248-349-6227

Construction Bonding Specialists, LLC works with new and experienced contractors to find and solidify the most appropriate bond needed. We are a distinct surety-bond-only agency with decades of bonding experience. We’ll work with you to discover all the bonding solutions for any case, ranging from ordinary to challenging.

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Contractor License Bonds

Contractor License or Permit Bond: A contract license or permit bond involves three different parties: the obligee, the principal, and the surety. It is a promise that the surety makes to pay the obligee in case the principal fails to fulfill their statutory requirements. These bonds are typically required by cities, states, and municipalities.

Contractor License & Permit Bonds are required by individual municipalities throughout Michigan and around the country in order for construction work to be permitted. State licensing boards, and local municipalities all routinely require contractors to file a bond of one type or another to guarantee specific work done.

WHAT IS A CONTRACTOR LICENSE BOND & PERMIT?

To obtain licensure or a permit, contractors need to get a license or permit bond from a surety bond company. The three parties involved are the Contractor (principal), the City, State or Municipality (obligee), and the Insurance Carrier (surety). The contractor license & permit bond not only benefits the contractor by allowing them to perform work within that jurisdiction; it helps others who could be involved or affected by unethical and costly business decisions. The bond ensures that the principal contractor will provide services in accordance with the Statute or Ordinance’s laws of the city and state or municipality, such as adhering to building codes.  

If the contractor fails to fulfill the terms of the Statute or Ordinance within the jurisdiction the bond would pay damages caused/ sought by the affected party through the Obligee (City, State or Municipality). However, the surety will not simply absorb the loss. If a claim is made against the bond, the principal must reimburse the surety for any money they paid out when settling it. To get rates for a Contractor Bond, contact us today!

BONDS ARE ALL WE DO!

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