Homeowners can get careless after a major weather event has come through their community, and their homes are damaged. They don't always ask to see licenses and certifications before they agree to let a stranger make extensive repairs to their homes. Many don't even see potential problems when the stranger demands to be paid before doing anything. Seattle, Washington city officials know most of these strangers are con artists. Professional contractors don't knock on doors to offer their services, and when they are called upon to do so, can produce contractor bonds Washington surety companies will be able to verify.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
There are three basic types of contract agreements. One is required when contractors bid on jobs. This guarantees the bidder will provide the other two types of agreements once the bid is won. A payment bond guarantees contractors will pay all the subcontractors and suppliers used to perform the job. A performance bond assures the client that the contractor will do the job according to the contract they entered into.
Other types of agreements surety companies issue include site improvement, supply and maintenance. A subdivision bond is issued to guarantee contractors will build improvements within a subdivision according to local rules and regulations. These improvements can include streets, waste management systems, and sidewalks.
The Miller Act became law prior to the second world war. It stated that all contractors, who were awarded public works contracts, be required to have a payment and performance bond for any job that exceeded a hundred thousand dollars. Individual states have similar laws regarding public works contracts. These are generally referred to as Little Miller Acts.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
Contractors do default, and the surety company is left with only a few options. It can contact the client and try to get an agreement that will allow a rebid in order to finish the job. Depending on the situation, the company may decide to give the contractors the funds necessary to complete the job. If the company does this, contractors must repay the loan with interest out of profits from the work in question. The company can also reimburse the client for any losses.
Once contractors default, they will most surely be dropped from their current surety provider and find it very difficult to get a bond from another one. When someone offers to repair a homeowner's damaged property, but won't produce evidence of a bond, the front door should be shut politely but firmly.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
There are three basic types of contract agreements. One is required when contractors bid on jobs. This guarantees the bidder will provide the other two types of agreements once the bid is won. A payment bond guarantees contractors will pay all the subcontractors and suppliers used to perform the job. A performance bond assures the client that the contractor will do the job according to the contract they entered into.
Other types of agreements surety companies issue include site improvement, supply and maintenance. A subdivision bond is issued to guarantee contractors will build improvements within a subdivision according to local rules and regulations. These improvements can include streets, waste management systems, and sidewalks.
The Miller Act became law prior to the second world war. It stated that all contractors, who were awarded public works contracts, be required to have a payment and performance bond for any job that exceeded a hundred thousand dollars. Individual states have similar laws regarding public works contracts. These are generally referred to as Little Miller Acts.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
Contractors do default, and the surety company is left with only a few options. It can contact the client and try to get an agreement that will allow a rebid in order to finish the job. Depending on the situation, the company may decide to give the contractors the funds necessary to complete the job. If the company does this, contractors must repay the loan with interest out of profits from the work in question. The company can also reimburse the client for any losses.
Once contractors default, they will most surely be dropped from their current surety provider and find it very difficult to get a bond from another one. When someone offers to repair a homeowner's damaged property, but won't produce evidence of a bond, the front door should be shut politely but firmly.
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