by leeleerambles » Fri Nov 04, 2011 03:06 pm
Just curious when you do bonding insurance, do you deal usually with GC's trying to bond temporary workers or do you have other types of companies you work with? As an insurance broker in AZ, we have dealt with alot of people in the construction industry so I was curious about what other people were finding.
Posted: Fri Nov 04, 2011 06:11 pm Post Subject:
Bonding is not insurance and has nothing to do with insurance.
Bonds are, in effect, nothing more than an extension of credit. There are many types of bonds, I think you're referring to a construction contractors bond, a "contract" bond, which is primarily a performance guarantee type of bond, as well as a "License" bond.
Just about every state requires that contractors are licensed, bonded and insured. The Construction Contractor license now requires an examination in many states.
The insurance element is primarily commercial general liability.
The bond, required in various amounts dependent upon the state, is to assure performance of the contractor. If the contractor fails to perform based on the contract with the purchaser, the contractor is liable for the monetary damages suffered by the purchaser of the goods.
Let's say that the customer has pre-paid for certain construction services and the contractor simply fails to complete the work and bails out on the customer.
The bonding company ( The Surety) is the company issuing the bond. The insured person is the principal- the person who is supposed to do something, or is obligated to perform ( The Obligor). The Obligee is the person for whom the work is to be performed... the customer. The Obligee is protected by the bond for the actual loss or damage sustained, up to the bond limit (the "bond penalty").
Where the difference comes into play between insurance and bonding is that in a bonding environment, the Surety has the right to seek reimbursement from the Obligor for any claims it has paid to an Obligee. It's an extension of credit... not insurance.
InsTeacher 8)
Posted: Mon Nov 07, 2011 03:10 pm Post Subject: Anyone specialize in bonding insurance?
Thanks for the response, I do appreciate it and I understand it is not bonding insurance per se. But more of a contractor performance bond.
Posted: Sat Feb 25, 2012 07:54 am Post Subject: Bonds
You should find a good broker to work with. You will be paid less, but they will take time with you during your learning curve. Bonds can be very tricky and you have to handle them with some care. Example: Fidelity bonds typically have a conviction clause that you need to make your customer aware of. It isn't difficult - just a new world. Find a good bond broker.
Posted: Wed Apr 25, 2012 12:26 pm Post Subject:
Learning process takes time, and we cant expect earning in this period, it will be great to keep up the mind on skills and not for money in that period.
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