Payment and performance bonds are required by contractors to carry out a successful construction project. These bonds are also known as surety bonds. Surety bonds make sure that the project is completed successfully and that subs and vendors are paid.
This surety bond company in Georgia has noticed that many people get confused between a surety bond and insurance. For those who are confused or don’t know, we would like to make it clear that surety bond and insurance are two different things. Insurance is a two party agreement that guarantees a contract or certain criteria, and a surety bond is a three party agreement that anticipates losses.
The contractor who gets a performance and payment bond may become eligible to work on a specific construction project. By signing the performance bond, a contractor ensures that s/he will complete the project as per the terms of the project and by signing the payment bond, s/he ensures that s/he will make payment to all the other people involved in the project, such as material suppliers and sub contractors.
We recommend that the contractors getting a performance bond ensure that they read the project requirements and make sure that they can fulfill the project requirements.