Two Things You May Not Know About Surety Bonds That Could Cost You

Surety bonds are very common in our society, but they are segmented enough in their own sections of life that you may not know some very important information about them; information that could cost you and your business a lot of money. More on that in a second, but first, let me ask you a question: what do you want out of your surety bond? If you have the wrong set of expectations from a surety bond, that could get you into a lot of trouble. With that said, let’s look at two things that just might save you a lot of money.

First, what exactly is a surety bond? Believe it or not, a lot of contractors buy surety bonds because they have to have them, and without ever really understanding what they really are. Here’s a great definition: “A Surety Bond is an agreement providing for monetary compensation should there be a failure to perform specified acts within a stated period.” The two elements in this definition that are important are 1. Monetary Compensation; and 2. Failure to Perform. This is where a surety bond operates, and where it will, or can, make you a lot of money. IF you don’t understand how it operates, how are you going to maximize what a surety bond can do for you? If you are not aware of what you are buying, you are going to get all you can out of a surety bond.