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Ensuring Your Project Gets Done
A Contractor Bond, also commonly called a Surety Bond, is a three-party contract that protects the customer and ensures you complete a job according to your agreement and all applicable laws. Because it guarantees your performance to your client, it is a mandatory requirement in many trades and states. If the bond company pays a claim due to a failure on your part, you are legally obligated to reimburse the bond company in full, which makes it fundamentally different from business insurance.
Bond vs. Liability Insurance
People often confuse a bond with insurance, but they aren't the same. Liability Insurance protects you from third-party lawsuits and doesn't have to be paid back. A Contractor Bond is a financial guarantee that protects your clients or project owner; think of it like a line of credit proving your financial reliability and trustworthiness.
What Determines Your Contractor Bond Cost?
The cost of a bond is typically 1% to 15% of the total bond amount. While many Contractor Bonds are commonly set at $15,000, the premium rate depends largely on your credit score. A higher score means a lower premium. For larger projects and bond amounts, the Surety may examine your company's cash flow and financial history.
How a Contractor Bond Works: The Three Parties
A Contractor Bond protects your client by formalizing the obligations between three specific parties.
You, the Contractor: The business or contractor purchasing the bond. The Principal is ultimately responsible for their contractual actions and must repay the Surety company for any claims paid.
The Bond Company: The bond or insurance company that issues the bond. The Surety financially guarantees the contractor's performance and compliance to the Obligee.
The Client/State: The party requiring the bond, such as a state licensing board, government entity, or the project owner. They are the party protected by the bond.
Business Insurance Made Simple: Why Choose AIS
Your business is a major investment, and it deserves more than a standard, one-size-fits-all liability policy. At AIS Insurance, our experienced Business Insurance Specialists are driven by one goal: protecting your hard work and assets. We work quickly to understand the specific risks of your industry, allowing us to find and fix the dangerous gaps in coverage that leave businesses vulnerable, ensuring you get true financial peace of mind.
Stop settling for confusing policies. We make commercial insurance clear, fast, and highly effective. Call us today to speak with our experts who are ready to tailor a Contractor Bond to your needs.
Additional Insurance Coverages to Bundle
It would be great if you could save money on insuring your business and all of its assets under one roof. AIS is the insurance house that finds affordable coverage for a wide variety of businesses. We compare the best rates from multiple trusted carriers partners, so you know you’re getting the best protection for the best price.
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