What is a surety bond?
All contractors that work in our jurisdiction are required to have a Surety Bond in place. This bond is an insurance policy to cover lost wages and fringes of our membership. If you are planning to work in the jurisdiction of the Metropolitan Regional Council, and do not have a bond, please be advised that no work can be preformed. Currently, most Collective Bargaining Agreements call for a $75,000 Surety Bond. Please call the fund office with any specific bond questions. Any contractors looking for a Bonding agency can be referred to: Universal Service Agency http://www.universalbonds.com 501 Office Center Drive, Suite 128 Ft.
According to SBA, a surety bond is a three-party instrument between a surety, the contractor and the project owner. The agreement binds the contractor to comply with the terms and conditions of a contract. If the contractor is unable to successfully perform the contract, the surety assumes the contractor’s responsibilities and ensures that the project is completed.
Each company or entity must prove they are capable of paying the various truck lines, airlines, railroads, or any other entity being used by the broker. An individual’s credit, and/or financial strength, is investigated with extreme thoroughness. Only then is a “bond” issued. Accordingly, if for some reason the broker fails to pay the transportation company, the bonding company must pay. As you can imagine, the bonding company is very careful about who they insure.
Surety bonds are designed to guarantee performance in the face of a set of particular risks. Each surety bond must be uniquely tailored to meet specific needs. A surety bond is an agreement under which one party, the surety, guarantees to another party, the obligee, the performance of an obligation by a third party, the principal. The three most common types of surety bonds include: Contract Surety Bonds that the government or an owner of a construction project may require a contractor to obtain. There are three types of contract surety bonds: Bid bond – Affords protection to a project owner (obligee) in the event a successful bidder will not enter a contract and will not provide the required surety bonds or other security Performance bond – Provides protection to the obligee if the contractor defaults on its obligations under the bonded contract Payment bond – Guarantees that the contractor will pay subcontractor, labor and material bills associated with the construction project. Spec
Surety bonds are three-party agreements in which the issuer of the bond (the surety) joins with the second party (the principal) in guaranteeing to a third party (the obligee) the fulfillment of an obligation on the part of the principal. Obligee: The party (person, corporation, or government agency) to whom a bond is given. The obligee is also the party protected by the bond against loss. Principal: The individual who is required to be bonded by the obligee. Surety: A person or institution that guarantees the acts of another person or institution.
