Surety bonds mostly find their application in the real estate industry. These bonds are contracts that have three participating entities: The contractor, the project owner, and the surety company. Most of the times, a surety bond in Florida will cover any misdoing from the contractor’s part, whether intentional or unintentional, to ensure that the project owner is able to get the value for his money. This is achieved by completing the work either by getting a new contractor on board, whose services are paid by the surety company, or providing any aid, if needed, to the original contractor to help him complete the project.
Thus, a surety bond in Florida signifies that the project owner will not have to suffer any loss due to any default from contractor’s end, the latter having the backing of a surety company. In general practice, there are three specific types of bonds that cover the cost of the contract. These include:
- The bid bond, which is the bond that covers the assurance from the contractor to complete the project owner’s work on time
- The performance bond, which ensures the project owner of receiving quality work delivery from the contractor
- The payment bond, which bounds the contractor to make payment to suppliers and subcontractors working with him on the project in a timely manner
How to secure a surety bond
- Hire an agent for a surety bond in Florida, who will assess your business’s model, and what you as a contractor have on offer, before forwarding it to an underwriter.
- The underwriter will further assess your business, its potential, capability to complete a project, and things it needs to work more on. The underwriter will update you with these details if needed, before forwarding the application to producer for processing.
- The producer will assess all the equipment and infrastructure available with you to finish the project as promised. He may take time to process it, carefully assessing every aspect that may make a difference later on.
- A surety bond will be issued, based on your potential as the contractor. This bond will cover for your financial requirement for completing the project, or even getting someone else to get the work done.
Even after a surety company issues a surety bond in Florida, you must try to maintain a good relationship with the producer and underwriter. Your goodwill with them, and the performance of your project, will help you secure a better surety bond (without riders) in the future.