A surety bond is a sort of guarantee from a surety agency that a contractor will finish the project as per the agreed terms. In case the contractor doesn’t complete the work in a timely manner, the bonding agency is responsible on behalf of the contractor. The bonding agency will either have to complete the remaining work or pay for the damages. Choosing a bonding agency is not easy with hundreds of surety bond NY agencies. You should look for a reputable, experienced, and knowledgeable bonding agency when getting a surety bond NY. Here are some tips to consider when choosing a surety bonding agency in NYC.
A surety bond is an agreement between three parties – such as the surety agency, the obligee or owner of the project (mostly the government), and the principal or contractor. The surety agency ensures the obligee that the principal will fulfill a contract within the specific time frame. If the principal defaults, the surety agency has to pay the obligee the insured amount as damages. When the bond is issued for a construction project, it is known as a contract surety bond. Most of the time, the government or private project owners call for surety bonds since they need to be sure that the contractor could finish the work as planned and in a timely manner. A surety bond protects the owner of the project in case the principal defaults on the contract.
Although surety bonding is a part of the insurance industry, it also has some similarities with banking credit industry. The primary duty of the agency is not to lend money to the contractor but to stand behind the contractor’s capabilities. The contractor has to pay a fee to the surety company in order to get the bond. A surety bond is beneficial to a business since it ensures that the contractor will complete the project as promised. The company will do a lot of research on the contractor that they fund. They should be satisfied with the contractor’s capabilities of handling a project of this magnitude effectively and in a timely manner. They will evaluate the contractor’s equipment, staff strength, expertise in the industry, and a lot of other things before agreeing to stand behind the contractor.
You should be cautious when choosing the right bonding company on the market. You research plays an important part in this regard since there are hundreds of bonding agencies on the market. Compile a list of reputed bonding companies that operate in New York. Once you have compiled such a list, you should check with the U.S. Treasury Department in order to validate the licensing and bonding status of the company. Check if the potential agency has experience handling surety bonds in the industry that you plan to avail the bond. These are important things to look for when choosing a reputable surety bond agency in NYC. Bonds Express is one of the top-notch surety bonding agencies operating in NYC.