The construction industry is increasing by the day. The global construction market will grow to $8 trillion by 2030. But, this sector is pretty risky. So, if you are involved in any construction project, you must have a construction performance bond.
If you’re a business owner who is in the process of building a new construction project, you will need to secure a performance bond. This type of bond guarantees that the contractor will complete the project according to the agreed-upon specifications.
If they do not, the bond company will step in and finish the job. It’s essential to find a reputable and reliable bond company to work with; here are some tips to help you do just that.
1) Check the Financial Stability of the Provider
First and foremost, you should always check the financial stability of the bond company. The last thing you want is to work with a company that is not financially stable and might not be able to pay out on a claim.
You can check their rating with reputed online agencies. These agencies rate insurance companies’ financial stability and provide insight into their ability to pay claims.
A company with an “A” or higher rating is considered financially stable. It’s also good to check if the company has any complaints with the Better Business Bureau.
You can do this by going to their website and entering the company’s name into the search bar. If there are any complaints, you will be able to see them here. You must also check their website. A company with a professional-looking website is more likely to be reputable and reliable. On the other hand, if their website is poorly designed or outdated, it could be a red flag.
2) Compare Prices
It is essential to compare the prices of different bond companies to get the best deal. The premium for a construction performance bond is typically a percentage of the total project cost, so you will want to get quotes from several companies to ensure you get the best price.
Make sure to compare the price and the terms and conditions of the bond to make sure you are getting the best deal.
The total estimate will include:
-The cost of the project
-The premium for the bond
-Any fees associated with obtaining the bond
When comparing prices, make sure to ask about any additional fees required to obtain the bond. These fees can vary depending on the company, so it is essential to get this information upfront.
Companies charge additional fees for:
-Underwriting
-Processing
-The surety’s legal fee
Make sure you know all the fees associated with each company to get the best deal possible.
3) Verify the Company’s License
It is essential to verify that the company you are working with is licensed and bonded. The Department of Insurance can help you verify this information.
If you’re in doubt, ask to see the company’s license and bond certificate. These should be prominently displayed in the office, and the staff should be happy to show them to you. If they cannot show you these documents, that’s a red flag.
4) Ask For Referrals
A good surety company should have no problem giving you a list of references. These are other businesses or individuals who can attest to the quality of the company’s work.
When you contact these references, be sure to ask about the company’s customer service, claims process, and overall experience working with the surety.
Good customer service will include:
-returning phone calls and emails promptly
-answering questions thoroughly
-keeping you updated on the status of your bond
-explaining the claims process clearly
Conclusion
In conclusion, these are some factors to consider when searching for a construction performance bond company. By researching and understanding your needs, you can find the right provider for your project.
The proper performance bond company will have the experience and financial stability to provide the coverage you need.