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.