The Importance Of Surety Bonds

If you’re just starting out as a contractor or in the construction business, you might have heard of surety bonds in Massachusetts. Surety bonds are a type of financial security for construction projects that assure the client that the contractor will fulfill all items on the work contract for material suppliers and laborers. The bond transfers the risk from the contractor, who is the principal, to the project owner, who is the obligee. Surety bonds MassachusettsTypes of Bonds  The three basic types of surety bonds are bid, performance and payment. A bid bond ensures that the bid for the job has been submitted honorably. The performance bid keeps the owner from any type of financial loss if the contractor doesn’t fulfill the terms of the contract. A payment bond makes sure that everyone involved in the construction job is paid, including subcontractors, suppliers and construction workers. Bond Benefits  By getting surety bonds in Massachusetts, you can increase your chances of securing jobs in the future, your subcontractors won’t have to file mechanic’s liens on a private project, you’ll be more likely to finish the project since the surety company might request indemnity from you and you can receivefinancial and technical assistance from the bond underwriter or issuer.   Surety bonds represent a type of trust that exists between you and your clients and might even be required by your industry.

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