Many people have a difficulty in differentiating between a surety bond and an insurance cover. A a surety bond is different from the insurance cover as it is not typical to an insurance policy, but the surety company is part of the insurance company. A a person is therefore not supposed to say that a construction surety bond is the same as an insurance policy in any way.
The type of help that a surety bond offers comes in two ways that are in the private and in the public construction and the private sector it serves to be nature that the financing of the project is smooth from the time it was started to the time that they will finish the last activity. A construction surety bond has three bits of help when it comes to the public sector construction projects, and one is that it makes sure that the contractor pre-qualify for the project, and also it ensures that any subcontractor is paid for during in full and finally it makes sure that the contract financing is smooth till the end of the last activity.
The client who is enters into a contract with a contractor who has a surety bond benefits in many ways and one of it is that it promises the oblige that the project will be through as per the agreement of the contract. Another merit of entering into a contract with a contractor who has a surety bond is that you are promised that all the supplies of your project will be financed regardless of whether the contractor is experiencing financial struggles or not.
The third benefit on the obligee side is that he is promised of full compensation for any losses that may occur and that the contractor would be unable to finance.
Another merit to the obligee is that you are always sure that the person who you entrusted your project with has the full financial capability to take care of any risks that met occur. Another thing that you get assurance about is that during the bidding for your project, even the lowest bidder will be able to finish your project within the quoted price.
A benefit on the contractor side is that he or she is given the ability to bid for more that one project as a result of the leveraging of the surety bond and this earns more revenue. The contractor also gets more professional advice from the surety bond company accountants, lawyers and engineers. A contractor is also protected from any dispute that may happen between him or her and the client.