If you work in certain types of professions, you may have been told you need to have a bond to pursue desirable jobs. But what kind of bond do you need? With so many bonds available, you want to be sure you get the right one by understanding the purpose behind different bonds and how they protect you.
What Is the Purpose of Bonds?
The general intent behind a bond is to show that you intend to live up to a work promise. It’s a way of “putting your money where your mouth is,” so to speak.
Many different professions use bonds, but they are especially common in construction and contracting because so much money is on the line and so many people are involved in creating a new building or park.
What Are Some Common Bonds for Construction Professionals and Contractors?
When your reputation is on the line, a bond says you intend to follow through as promised on a project. Surety bonds are an umbrella term for a variety of different kinds of bonds used in construction and contracting, purchased from an insurance seller. Subcategories of surety bonds include:
- Bid bonds - usually required if public money is involved in a project and promise that the holder (the principal) will complete the project as per their contract with the obligee, including obtaining performance and payment bonds if awarded the bid
- Performance bonds - promise that the holder will perform a job according to the terms and conditions agreed upon at its start
- Payment bonds - hold the bond purchaser to paying subcontractors and suppliers as promised
- Ancillary bonds - promise that the holder will comply with special regulations or laws involved in a project not related to material concerns
Payment and performance bonds are also sometimes called warranty bonds.
Bonds are usually a certain percentage of the project budget and can be as high as 100% of the project costs. When this happens, the bond is usually included in the estimate for the job. The specifics of a project may be included in the bond, depending on what type it is and why it is being purchased.
Are There Other Types of Bonds?
Similar to construction and contracting bonds, there are other bonds that signify that the holder promises to uphold the terms and perform the duties of their profession. This is why bonds are also used by public officials, such as sheriffs, constables, jailors, court clerks, government treasurers, loan officers, attorneys, and notaries public.
Let Our Independent Agents Find the Right Bond for You
Our agents at J. K. Meadors & Co have a wide selection of bonds to give you the right coverage for your profession and any projects you’re involved in. You will appreciate our personalized service, dedication to the local community, and satisfied reviews from our many happy clients.
To arrange a bond for your work, call us at 405-377-0000 today, or reach out online to tell us how we can assist you.