A the problem that we are facing among many people is that they are unable to differentiate between a surety bond and an insurance cover. A a surety company is part of an insurance company, but the surety bond is not typical or same as an insurance policy. Although they come from the same company; you are not supposed to mistakenly say that a construction surety bona is the same as an insurance cover.
When we look at the help that a surety bond offer we find that it is divided into two that is to the public and the private construction and in the private construction it makes sure that the project is financed smoothly from the start to the end. In the public sector construction, surety bonds assist the contractor in qualifying for the construction project, and it also protects subcontractors by promising them full payment and also provides smooth financing to completion.
The client who is enters into a contract with a contractor who has a surety bond benefits in many ways and one of it is that it promises the oblige that the project will be through as per the agreement of the contract. The importance number two of contracting a contractor who has a surety bond is they you are promised as the obligee that no matter what financial struggles your contractor is in, the contract supplies will always be financed well.
The third benefit on the obligee side is that he is promised of full compensation for any losses that may occur and that the contractor would be unable to finance.
You also benefit from the assurance that the contractor who you entrust with your project has the financial capacity to take care of all the construction risks. There is also assurance that even the lowest of the bidders will finish your project as per the price quoted.
On the side of the contractor, he or she also benefits from the construction surety bond and one of the merits is that he or she can bid for more tenders and this earns you as the contractor more revenue as a result of the leveraging. The contractor also gets more professional advice from the surety bond company accountants, lawyers and engineers. A contractor is also protected from any dispute that may happen between him or her and the client.