Why Do Bonds Work? Because Good Surety Companies Ensure That They Do.

Many a time, when our friends or acquaintances seek assurance that what we are promising them will be done, we normally assuage their fears by saying, “My word is my bond?” However, whereas it may work with friends and relations, in businesses it does not – our word is just not enough. They require something more solid, something surer and this is where the need arises for a surety or guarantor to be the link between the two.

All the guarantor has to do is to issue a bond that whatever you are promising to do, you will do and you will do it as per the specifications of the contract and that if you fail to do it the surety or the guarantor will take over and ensure that the contract is completed and pay the first party, all monetary losses that he has incurred.

Here are two examples to further illustrate this point:

Suppose the school where you children study, collects the whole years fees in advance. You go to great lengths to arrange for the money, taking loans, borrowing from friends, digging into your savings and then suddenly you find that the treasurer of the school has disappeared with the cash, even before the school could commence.

As a licensed institution, the surety would respond and you would be compensated by them, whilst they in turn would target the absconding party to make good their loss.

In our second example, let us assume that the city where you live is floating tenders for the construction of a new bridge. Now all those who bid for the bridge have to be provincially or federally licensed businesses and regulations demand that they require bonds.

Before accepting the bids and giving the task to a particular contractor, the city’s municipality must ensure that the contractor has the requisite experience, know-how and most importantly the funds to bring the project to its desired conclusion.

However, if the contractor furnishes a bid bond, it is proof that he merits the job, as a credit-check must have been done on him, without which he would not have got the bid-bond. A bid-bond is the assurance that the municipality needs that they have chosen rightly. The bid bonds or the performance bond ensures that the job will be completed as per specifications and that if somehow the contractor falters than the surety will step in, lend its expertise, take over the project and see it to its culmination. At the same time it will seek damages from the contractor.

The question that arises now is that in the eventuality of the surety provider being as lax and slipshod as the defaulters in both the examples, than what happens – the municipality, the school and you the parents would be left in the lurch. Hence it is of the utmost importance that one chooses the surety firm wisely.

One such firm is Ai Surety Bonding, a leading Canadian Surety Bonding Insurance Brokerage, which caters to clients across the world. Testimonials from satisfied customers have revealed that they maintain the highest standards in everything that they do, with an unwavering commitment to honesty and integrity. Not only will they ascertain your requirements before recommending a bond, they will not forsake you after you have taken the bond. They will, through their proficient staff look after your requirements before, during and after you have purchased a bond, answering all your queries and even reminding you in advance of your bond renewal.

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Surety Bonds: Understand Them Before You Buy

In layman, easy-to-understand terms, surety bonds guarantee the performance of a written contract according to its terms and conditions. Surety bonds have nothing to do with investing, in the business context, they are like insurance – they uphold a promise to do something, the contract is breached and the surety pays off to ensure that the pledges in the promises are met.

Types Of Surety Bonds:

Bid Bonds, which guarantees that if a contractor is the chosen bidder on any given project, he will enter into a contract and provide a performance bid. A performance bond promises that agreements in the contract will be concluded according to the terms and conditions mentioned therein and the payment bond guarantees payment of laborers, subcontractors, and material suppliers.

How Much Does A Surety Bond Cost?

Bond costs differ significantly. It is reliant on the type of bond, the applicant’s credit history; his financial performance is taken under consideration and the place where the bond is needed. There is a variance in fees charged by different surety companies and all states don’t charge the same amount. The actual cost of the bond can really be calculated precisely by the surety companies.

Why Is It Mandatory To Buy A Surety Bond?

It is a compulsory requirement for many federal jobs, construction jobs or by the court. There are many industries where, in order to protect consumer rights, the government mandates having bonds. Many a time businesses licenses are not issued until the business get surety bonds. Before you buy make sure that you really need one – if you are unsure ask your bond agents.

Are Insurance Policies A Better Bet?

Certainly not, insurance guards against risk, whereas surety bonds safeguard in the event of an unforeseen failure of the principal. A bond is like credit- it only has to be paid if the principal fails to complete the contract. Moreover insurance costs more because the holder is also paying into a general fund that will cover the insurance company, if ever they have to press a claim.

How To Be Certain That You Are Getting The Right Bond At The Lowest Price?

Whenever you are out buying anything, you always want to make sure that you are getting the best bargain. Ai Surety Bonding is the best place to go to. They are leading bond agents and have maintained a model centered on customer needs. By answering all your queries they take the guesswork out of your buying. The company will ascertain all your individual requirements before recommending a bond, or if you really need it. They will make your bond experience an enjoyable and fruitful one and have a proven track record of better service than most other companies.

Does Applying for a Bond Cost Money?

None, the bond application and the quotation are free of charge. Some companies charge for application but at Ai Surety Bonding the application and quote don’t cost you a penny – moreover, they answer your queries to your utmost satisfaction.

Will Not Having Good Credit Hamper Your Chances Of Getting A Bond?

Getting a surety bond means that the company considers you to be financially reliable. Even if do not very good credit, you can still get the bonds, albeit at a higher premium, on the other hand, a good credit score means a lower bond fee. Good bonding companies share special rapport with surety companies, where they will place your bonds. The company’s reputation will act as your credit and substitute for your bad credit – all the more important that you chose a company of repute and standing.