Four Myths about Surety Bonds
In the contracting world, there are some myths about surety bonds. Do you really need one or is it just an added protection, for a costly price? This leaves the contractor with a decision to make: avoid the project or work without a surety bond. Below we dispel some of these myths: The first misconception is that surety bonds are expensive! This tends to alienate many small businesses from bidding on projects that require surety bonds. Which in essence, loses them money. Usually, (depending on the credit score of the applicant), a bond premium costs between 1% and 3% of the contract sum. Another misconception is that surety bonds are not needed by large construction companies. There is also the misconception that there is a bias towards smaller companies. This is because, many think, that they are more of a risk or liability to award projects to. This myth is based on the idea that large companies won’t need to buy surety bonds because they can afford to have safeguards in place. Have you heard, from colleagues and friends, that all surety companies are equal? This is another misconception. A surety company draws its strengths from its years of...
Read more
