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.
