Some homeowners get too excited and eager about renovation jobs that they don’t think through the process. They dive into the project and make major slipups like choosing a contractor simply because he's the cheapest, hiring someone who doesn’t specialize in the work they’re having done or trying to oversee the job themselves to save money. Whether you’re building a new home or remodeling your current one, there’s nothing worse than hiring contractor that fails to meet your expectations as planned. You basically want to know if the contractor will be able to deliver a good job. In this case, you might want to consider having a surety bond beforehand.
What is a Surety Bond?
A surety bond is a contract between three parties: Principal, obligee, and the surety. The principal refers to you, the one who the bond is required of. The obligee is the one requiring the bond. Lastly, the surety is the one providing the bond.
This kind of insurance dates back during Egyptian times that was used to protect the land and property owners so that the project will be completed accordingly as agreed upon.
Where to get a surety bond?
You can purchase a surety bond to an insurance company. The focus of their work is business underwriting, enforcing business contractual obligations, risk assessment, and risk avoidance.
You can even ask them to help you filter and screen the contractors. They will help you assess the risk of each other based on historical data of their past performance and projects, current financial status, and access to appropriate equipment. With these kind of people by your side, you can have a peace of mind that your project will be completed and performed by the best qualified instructor.
Although this product is offered by some insurance companies, it has a difference with usual insurance products. Insurance policy transfers the risk to the insurance company because by paying an agreed amount in the case of unpredictable circumstances. On the other hand, surety bond is predictable. And if something wrong happens, the risk will always be in the party of the obligee. The insurance company will have the obligee pay for a prescribed dollar amount in case the contract is unfulfilled by contractor.
State it in the contract
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The insurance company will base if the project is completed properly through the utilization of a contract. So if you want to be ascertained of everything, state every detail in the contract. Be specific in the results you want to see so the surety bond can protect you better. Things like what type of materials you want to be used or if you want additional features in your home should be included in the contract. A trip to a local lawyer to help you construct a better contract. Also, check out this great resource on Surety Bonds & How They Work.
Your newfound knowledge regarding surety bonds will surely let you protect yourself and your hard earned money. Make sure to use keep the above in mind to your advantage. After all, it is better to spend a little bit of more money rather than waste a large sum in the end. Having a project alone is stressful enough, you can manage it more by availing a surety bond. Having a peace of mind after all is very important, as you can focus more on what really matters.