Surety Bonds: Everything You Need to Know

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A surety bond is a contract. It is an agreement in which a surety company assures a project will be completed according to contract. If you are a contractor bidding for a construction project, this infographic will help you understand exactly what a surety bond is. It also shows why there is a need for surety bonds, and how they benefit contractors.

Surety bonds involve three parties: the surety company, the project owner, and the contractor. Whether a contract is for federal construction or the private sector, contractors must obtain surety bonds before bidding for a particular construction project. Contractors can obtain surety bonds from a surety company after undergoing a thorough pre-qualification process. A surety assesses the financial strength, business operations, and other qualifications before issuing a surety bond to a contractor. Surety bonds not only minimize the risk of contract default, but also increase a contractor’s project opportunities. However, there are different types of surety bonds used in the construction industry. See the below infographic to learn about the types of surety bonds your business needs.

Surety Bonds