There is a difference between the common insurance policy and a surety bond and many people finds it difficult to differentiate between the two. A a surety company is part of an insurance company, but the surety bond is not typical or same as an insurance policy. A a person is therefore not supposed to say that a construction surety bond is the same as an insurance policy in any way.
The type of help that a surety bond offers comes in two ways that are in the private and in the public construction and the private sector it serves to be nature that the financing of the project is smooth from the time it was started to the time that they will finish the last activity. When we come to the public sector construction projects, a surety bond offers different services, and that is that it helps the contractor to qualify for the first place of bidding the contract, and also it makes sure that the subcontractors are paid in full, and also it makes sure that the financing of the project is smooth until the end.
When we look at the person who is contracting a contractor who has a surety bond we find that he or she benefits in different ways and one of it is that he or she is assured that the project will be through as per the agreed time in the project 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.
Another merit to the obligee is that you are always sure that the person who you entrusted your project with has the full financial capability to take care of any risks that met occur. There is also assurance that even the lowest of the bidders will finish your project as per the price quoted.
A benefit on the contractor side is that he or she is given the ability to bid for more that one project as a result of the leveraging of the surety bond and this earns more revenue. A contractor is able to access quality advice from the surety bond professionals like engineers and accountants. A contractor is also protected from any dispute that may happen between him or her and the client.