Contractor surety bonds are very common in the construction business. Contractors must obtain a bond as part of the licensing requirement. Almost every government project requires contractors to be licensed and bonded. Should you insist on working with only licensed and bonded contractors in private projects? Yes.And there are good reasons for doing so:
A licensed and bonded contractor will abide by the government rules and regulations
A contractor surety bond requires that a contractor complies with industry rules and regulations. When a contractor submits the bond, it is understood that he/she will follow these rules and that your own project will proceed as per the rules.
What happens if the contractor does not perform as per rules and regulations? What happens when you suffer damages as a result? If the contractor fails to employ adequate safety measures and someone is injured, who will be responsible? As per the bond, the contractor is responsible for such security measures. If a problem occurs, a complaint is then levied against the bond. The surety will pay the compensation if the complaint is genuine. In this manner, your risk of liability is reduced.
You know they are already vetted
When issuing a bond, a surety company will make sure of certain factors. The company will typically check the applicant’s financial background and capacity of conducting a similar project. The bond is also a risk so surety companies are usually quite diligent in investigating applicants, especially in evaluating and vetting financial stability. When you hire a licensed and bonded contractor, you can be assured that he/she has passed a previous vetting process and are more likely to finish the project.