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Obtaining The Surety Bonds And The Need For Construction Liability Insurance

A surety bond is usually an agreement among three different parties in the form of the project owner, also known as the obligor, the contractor, referred to as the principal and also at times the subcontractors. The purpose of the agreement is to ensure that every party involved commits to respecting the contracts documents that they sign. In the case of a contractor requiring their subcontractors to obtain surety bonds, the subcontractors become the principal and consequently, the contractor becomes the obligor. Surety bonds are required when one is out to seek any construction contract with the federal government as well as local governments as part of risk management where it is one of the set measures to protect taxpayers' money. The surety bonds not only apply to the public projects but they also apply to the private construction projects as well. Here are few steps to obtaining surety bonds and more without any hassle. In the modern days, every company is seeking to ensure that their contracts are respected highlighting the needs for surety bonds.

Statistics indicate that when there are not safety bonds in use, there are chances of losing cash. The surety bonds are thus helpful to both the project owner and also the contractor. The third party in surety bonds is the surety provider or an insurance company which becomes secondarily liable for any risks that occur. The purpose of a surety in the surety bonds is to guarantee the performance of the contractor to the project owner. Thus the surety bond protects the obligor rather than the contractor. There are two main types of surety bonds from  safety consultants that are offered; commercial surety bonds and the contract surety bonds and both aim at providing financial security and performance assurance to the obligor.

There are safety norms and standards that are followed in construction sites which aims at limiting the occurrence of accidents, injuries and also damages. But even with all these measures in place, accidents will occur but the contractors need to have Builders liability insurance which will provide coverage for the builders and also the contractor as well. The insurance provides coverage for third-party claims since there may be cases of accidents, thefts injuries or destruction of property. Any contractor needs to have insurance coverage as it protects them from all claims detrimental to the construction industry and also helps the project owner from major financial losses due to any party not respecting the contract.