Surety Bonds

With spring in the air, home owners are sure to be thinking about that renovation project that’s been on the backburner during the cold months. Yet big projects likely require a specialized contractor that can complete the renovation or addition. 

But don’t take the contractor’s word for it and end up stiffed with a floorless sun room or shoddy plumbing in a jumbo jacuzzi. By”>investing in a surety bond home owners can guarantee that the contractor not only finish the project, but finish it properly. 

Insurance companies often sell surety bonds, and offer risk assessment advice. It’s likely that the insurance company will fulfill the surety role, which is to hold the contractor, or principal, and home owner, or oblige, to their contractual agreements.  

With that in mind, it’s important for home owners to include explict details about what they want out of the project, how they want it done and what materials should be used for the project. Thanks to the surety, the contractor will have to adhere to the terms agreed upon in  the contract. 

Insurance companies can often provide risk assessment of contractors so home owners can wisely choose who will make their vision a reality. To pare down the list of potential contractors, insurance companies examine contractors’ work history, finances and equipment. However if the contractor does not fulfill contractual terms, the surety bond does not act like an insurance policy that makes the insurance company assume the risk. Although bonds are more finite, some insurance companies will include a dollar amount to be paid to the home owner if the contractor bails.

A surety bond is a worthy investment for home owners who want to improve their residence with an addition or renovation.  When considering a major venture like this, it’s better to be safe than sorry. After all, nobody wants to flush their money down a toilet, especially if a contractor’s sloppy work keeps it from flushing.

Contributing Writer – Robert Schroell

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