A the problem that we are facing among many people is that they are unable to differentiate between a surety bond and an insurance cover. A a surety company is part of an insurance company, but the surety bond is not typical or same as an insurance policy. Although they come from the same company; you are not supposed to mistakenly say that a construction surety bona is the same as an insurance cover.
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. In the public sector construction, surety bonds assist the contractor in qualifying for the construction project, and it also protects subcontractors by promising them full payment and also provides smooth financing to completion.
There are benefits that go to the person who enters into a contract with a contractor who has a surety bond, and one of the merits is that the obligee is promised that his or her project will be through within the agreed time frame in 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.
To also benefit as the obligee in that you are also assured that in case a loss occurs in your project, you will get full compensation from the bonding company in situations where the contractor is unable to pay.
You also benefit from the assurance that the contractor who you entrust with your project has the financial capacity to take care of all the construction risks. 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.
On the side of the contractor, he or she also benefits from the construction surety bond and one of the merits is that he or she can bid for more tenders and this earns you as the contractor more revenue as a result of the leveraging. The contractor also gets more professional advice from the surety bond company accountants, lawyers and engineers. Lastly the contractor also benefits in the he or she is protected from any type of dispute that may occur between the clients and the contractor.