#surety services

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Understanding Surety Bonds

If you run a contracting business, you’re going to come up against the requirement for surety bonding at some point in time. Whether it’s the U.S. Miller Act, any of the state Little Miller Acts, or local and regional requirements, being bonded is quite simply a necessity to keep your business operating and compete with other contractors.

Even so, many contractors are confused as to exactly what a surety bond is, how it differs from an insurance policy, what it protects and how it is used. See surety bonds explained, what they mean for you and your contracting business, and learn where you can go to get the best, fastest surety bond service.

Surety Bonds Explained

Surety bonds are a form of protection that a principal (contractor) acquires which guarantees that if they don’t meet one of the conditions of their contract, payment will be made. Anyone who is affected by such a failure will, then, be compensated for their loss. These people, the obligees, will be able to place a lien against the appropriate bond.

Unlike an insurance policy, a bond protects the people with whom you contract as opposed to protecting you, and unlike insurance a bond is effectively a loan. When you use your bond, you’re on the hook to pay it back.

Performance Bonds

The most common and universal type of bond is a performance bond. These bonds guarantee that you will complete the responsibilities of your contract. They cover your projected completion dates, your quality standards, design details, and all other aspects of your promised deliverables. If you don’t deliver on time and at high quality, your bond will compensate the obligee.

Payment Bonds

Most contractors work with subcontractors on a job, from workers you bring in to the vendors who supply your materials and equipment. When you fail to pay these people, they can place a lien against your payment bonds to make sure they get compensation.

Bid Bonds

Bid bonds, similar to performance bonds, assure your obligee that you will follow through with an agreed-upon condition. In this case it’s the bid proposal you offer. It also guarantees that if you can’t that you’ll follow through with an alternative that is mutually agreed upon. These bonds stop people from making frivolous bids and false starts in the process.

Subdivision and Site Improvement Bonds

There are times when a contract requires extra conditions that have to be met, which are beyond the normal project scope. These conditions may not be covered under the performance bond and have to be covered via a secondary bond. This is a subdivision bond or site improvement bond. These bonds cover things like code-compliance issues, gutters, curbs, sewers, signage, green spaces, drainage fixtures, and the like.

Working with the Right Surety Bonding Agency

If you are in need of having surety bonds explained in more detail, the right surety bonding agency is a must. National Surety Services, Inc., has been in the business of surety bonding for decades. We’re here to take the stress and confusion out of the process and get you the bonds you need. For more information, give us a call today!

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Why You Want A Surety Expert

Surety bonding is a fact of life in the construction and contracting industry. It’s the means by which construction companies not only protect themselves and their clients, but prove their own reputations. A company that carries the right bonding is sure to complete the job responsibilities to which they agreed, and if they can’t, their clients will receive compensation for the failure.

Too many contractors, however, confuse surety bonding with insurance and go to their insurance company to get bonded. This can be a serious mistake that can leave you without the essential protections you need. Learn why it’s important to work with experts in surety services instead of seeking bonding through an insurance company, and where you can go for help.

Surety Bonds vs. Insurance Policies

The first thing you need to understand, which most insurance agents won’t tell you, is that a surety bond is absolutely not the same thing as an insurance policy. Both provide a degree of protection on a job, but that’s where the similarities stop.

An insurance policy is in place to protect you and your company. It’s money that kicks in when something unforeseen or even tragic happens on the job site. It covers theft, damage to your equipment, damage that you cause to someone else’s property, medical bills for injuries and accidents, and other issues.

A surety bond, on the other hand, protects your service providers and clients. It’s money that will pay for your failure to complete your obligations. Depending on the type of bond you secure, it pays your subcontractors and materials providers. It pays your obligee in the event you can’t deliver. It’s also a loan that you have to pay back, unlike an insurance policy.

Why a Surety Expert Matters

For these reasons, among others, you want to work with a surety expert instead of an insurance agent. Surety bonding experts understand the unique nature of their field and the services they provide. They understand how bonds work, how they interact with your insurance policy and the services you provide, and they can not only get you bonded, but can educate you on the disconnect between bonds and insurance.

Getting the Service You Need

Another reason to work with a bonding expert is that too many insurance agents try to package and bundle everything. This all too often results in you paying way too much for a lot of representation you just don’t need. Navigating these packages can be very overwhelming and lead to you being more confused than ever.

Work with the Right Bonding Agent

The right surety expert will avoid the confusion, cut through the complexities, and help you to get exactly the bonds you need to protect your clients and keep you legal. The right bonding can enhance your reputation, especially if you don’t use the bonds. Work with a surety bonding agent and get the protection you need, when you need it, to bid on the jobs you want.

At National Surety Services, Inc., we’re here to make the process of surety bonding easy and fast. Give us a call for more information today!

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Why Your Insurance Agent Should Be Working With A Surety Expert

One of the biggest mistakes many contractors make is thinking that surety bonds and insurance coverage are the same thing. In truth, while these two forms of coverage are similar, they are separate and distinct, and fulfill different purposes in your business operations. It’s vital to have both, but unfortunately, all too often an insurance company will convince you that insurance is all you need.

This isn’t necessarily malicious on the part of the insurance agent; many just don’t realize the difference between the two, or the importance of having both. Discover the reasons why your insurance agent should be working with a surety expert, and understand the difference between surety vs. insurance.

Surety vs. Insurance

The key differences between surety vs. insurance reside in what they cover, who they protect, and both when and how they pay out. It’s a mistake thinking that surety works exactly like your insurance policy, or vice versa and understanding the difference can be key to making sure you have the coverage you need, when you need it.

Insurance Protects You

An insurance policy protects you in case of unforeseen accidents. If your business suffers damage, whether it’s damage to a person, equipment or property, insurance will pay out to cover that damage. If someone on your payroll damages someone else, your insurance policy will cover that damage. It’s a protection against liability and to cover your losses.

You pay a premium every month to keep this coverage in place, and it’s ongoing. Insurance will be there to protect your business whenever you need it.

Surety Protects Your Client

A surety bond, on the other hand, is taken out for each individual job upon which you bid. You generally pay the premium for the surety policy up front, and it covers the entire job. However, it doesn’t protect you or your losses. It protects your client and depending on the type of bond, sometimes your workers.

A surety bond is in place to compensate anyone who would be harmed if you fail to live up to your contract. If you can’t finish the job for whatever reason, the various bonds you carry will see to it that your client is reimbursed for their losses, that your subcontractors are paid, and other obligations are met.

There are a number of different types of bonds you might carry on a job. Performance bonds, for example, promise that you’ll finish the job. Payment bonds promise that you’ll be able to pay your subcontractors and suppliers. Bid bonds are a promise that you’ll comply with your bid contract. You may need multiple bonds for your job.

Finally, a bond is a loan. If you need to use your bond coverage, you’ll be on the hook to pay it back. It’s extra incentive to be sure you live up to your responsibilities.

Getting the Right Coverage

When your insurance company works out your policy, they should also work with a surety bond expert to ensure that you’re properly protected from all ends of the spectrum. If you’re in need of the right bonding, and you need more information, NSSI can help. Get in touch with us to get started today.

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Idaho Little Miller Act

The law that would become the Federal Miller Act was originally enacted in 1894 and was at the time called the Heard Act. It was established to require a performance and payment bond to provide a degree of protection to subcontractors and materials providers. This act, however, was originally held back by a wealth of limitations at the procedural and substantive levels, which led to it being amended and superseded in 1935. At this time it was called the Miller Act.

Since then, individual states have stepped forward to enact their own acts requiring these bonds at levels other than Federal. Such statutes are known as Little Miller Acts, and they are specific to each state. Learn about the Idaho Little Miller Act, what it means for your business, how it works, and why these acts are so important to contracting companies.

Purpose of a Miller Act

The Federal Miller Act and associated Little Miller Acts exist to address primary concerns in the performance of construction projects. These concerns are the completion of jobs bid upon by contractors, and the payment of material suppliers and subcontractors. The means by which these assurances are granted are performance bonds and payment bonds, respectively.

The Miller Act requires that all contractors bidding on a government job carry performance and payment bonds in significant enough sizes to cover their obligations. Little Miller Acts require the same coverage, but at the state level. Thus, when bidding on a state government job, a contractor must carry these bonds at levels specified by the state Act.

Idaho Little Miller Act Statute

The Idaho Little Miller Act allows those who provide materials or subcontract on a project in the state to file a lien against the project to ensure that your proper payment is rendered. Such liens, since they are technically not against actual property but are against bonds, are known as bond claims or little miller act claims.

The Act requires that performance bonds must be carried in the amount of at least 85% of the total contract amount based on successful completion of the agreement. This means if a bid accepted for $100,000,000, you would need to carry a performance bond of at least $850,000.

It also requires that a payment bond be carried, also at least 85% of the value of the total contract, for the purpose of ensuring payment to those supplying materials, labors, or equipment to the contractor during the course of the job.

Other Requirements and Getting Bonded

There are a range of other requirements for state level jobs under Idaho’s statute. These include the ability to withhold up to 5% of the payment required as a retainer. Bonds have to be executed by surety companies that are licensed and authorized to work in the state.

NSSI is licensed and certified to issue bonds in Idaho, and we can help you to ensure that you’re properly covered at all levels. If you need bonding to comply with the Idaho Little Miller Act, we’re ready to help. Get in touch with us to get started today.

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Keeping Your Crew Safe This Holiday Season

Summer is upon us now, and with the Fourth of July upcoming, followed by Labor Day at the end of summer, it’s a high travel season. This can also make construction sites even more dangerous than usual, especially when combined with high heat and the dangers that come with it.

Of course, no contractor wants to put their people in danger. It’s important to carefully plan your work zones for the travel season, though it’s also important to understand that you can’t account for every possibility. Discover some important tips to keep your crew safe this summer holiday season, and be certain you have the right performance bid bond in place.

Things to Consider When Planning Your Site

The first thing you need to do on any job site is to develop a plan of action. Put together a timeline of activities, understanding that on days like Independence Day and Labor Day you’ll likely be shutting down. You want to be sure that things are properly secured and shut down so that the public is safe.

Prepare to address all municipal regulations, and make sure there’s plenty of time to secure the site. Plan to conduct walkthroughs to look for safety hazards. Remember that the public are not contractors and things that are obvious to you may not be obvious to them. Finally, put a protocol in place to deal with any emergencies that do happen.

Executing Your Plan

Now it’s time to execute your plan. Keep your crew on high alert the entire time they’re on site. Distracted and drunk drivers are an epidemic this time of year so make sure you’re giving plenty of room to avoid traffic troubles. Know how traffic patterns work and flow, and make sure you’ve got the right signals and signs to clearly alert all passers-by on foot or on vehicles of the danger.

Keep your equipment secured and out of sight. Keep your equipment away from travel zones. Don’t leave tools, debris and equipment unattended. If there are fall hazards, make sure they are thoroughly secured to keep intruders and unauthorized people clear. Make sure that the site is well lit at night so all travelers can see the signage and conditions.

Communication is Key

Finally, make sure you have a constant, clear and open line of communication with your crew, your project managers, and your site supervisors. Make sure they are aware of the plan, the safety procedures, and the potential dangers for which they need to account. They first line of defense against accidents is safety.

Performance Bid Bond Services

Having the right bonding in place is also essential to being sure you can cover your obligations in case of an emergency. Secure the proper performance bid bond for every job and if the unthinkable happens, you’ll at least have the means to cover your workers and the project.

When you’re ready to undertake your next job, look to the performance bid bond services from National Surety Services, Inc. Learn more about us, and give us a call for more information today!

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Why Working With Hubzone Certified Contractors Benefits Your Company

When you run a contracting or construction business, working with subcontractors is a fact of life. Very few companies have the ability to function with just their current staff, especially when big jobs come up. Those that attempt to keep such large numbers of staff on board generally face layoffs during lean times.

As such, it’s best to work with subcontractors on an as-needed basis. When it comes to competing for federal jobs, it’s often a good idea to partner with companies located in historically underutilized business regions. This can give you a major competitive edge. Learn why working with HUBZone certified contractors is the best bet for your company, and why it’s equally important to have the right surety bond in place.

What is a HUBZone Certified Contractor?

HUBZone certified contractors are those businesses who operate in areas that are historically underutilized. The regions can be rural or urban, but the HUBZone program is designed to stimulate the economy in these economically disadvantaged communities, and the Federal government spends 3% of all its procurement dollars on contracts in this program.

These firms tend to be small, and as such they seek to subcontract with larger firms called Primes. If you are trying to bid on government contracts, working with one of these firms can be a big advantage.

Become Eligible for HUBZone Dollars

Working with a HUBZone contractor makes you eligible to get extra funding for your jobs. The procurement dollars the government sets aside for these companies open up new business opportunities for Prime contractors like you, who work with them.

Preferential Positioning

The Federal government is actively seeking to give work to HUBZone companies. This means that by working with a certified company, you will receive preferential positioning on your bids. So long as your offer is a maximum of 10% higher than that of a non-HUBZone team, your bid will be considered as lower.

Meeting Goals

As the government actively seeks these companies to work with, they find that they’re still not meeting their goals. Because of this, they’re even more likely to accept your bid. In fact, as maps are being redrawn, many companies are losing their certifications. This means agencies are eager to find new teams.

How to Find a HubZone Partner

Partnering with a HUBZone contractor is easier than you might think. The U.S. Small Business Association provides an online tool that lets you run a search for a certified firm, based on your industry and your geographic location. Also check for certification listings on websites.

Be Sure You Have Surety Bond Coverage

No matter who you decide to work with, however, always be sure that you’re properly bonded. Working with a subcontractor is a risk at any time, and you need to be sure that if something interrupts your job, you have the ability to compensate the client, to pay your bills and to cover your obligations.

If you are in need of the right surety bond coverage, NSSI can help. Get in touch with us today to learn more about our surety bonding services and to get started with your application.

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Performance Vs Payment Bonds: Why The Difference Matters

As you set out to get your company bonded for your next project, it’s important to understand the different kinds of bonds you’ll face. Two of the most important are performance bonds and payment bonds. While both are likely required for government projects under your state’s Little Miller Act, many contractors are confused at the difference between the two.

It’s vital that you understand these differences so you can always be in compliance with state and Discover the many reasons why it’s important to understand the difference between a performance bond and a payment bond, and where to get bonded today.

Difference between Performance Bond and Payment Bond

The real, major difference between performance bond and payment bond is pretty straightforward. A performance bond benefits the principal (the person with whom you are contracting) and guarantee that you will finish your obligations under the contract. A payment bond benefits your suppliers and subcontractors, guaranteeing payment for the labor, services and materials they provide you.

Different Bonds for Different Reasons

As the obligee on a contract, or the primary contractor, you have a lot of responsibilities. Your major responsibility is to the principal, or the person to whom you’re providing services. You have an obligation to do what you agreed to do, whether it’s constructing a building or doing work on a lot.

Likewise, you have a responsibility to any subcontractors you bring onto the job. You need to pay them fairly for the services they provide, under a contract you create with them. Finally, you have an obligation to pay your vendors and suppliers for the materials they provide you.

Should you fail to live up to these responsibilities it can cost vast damage, sometimes into the millions of dollars. The right bonds will cover such failure if it arises.

Performance Bond

A performance bond exists for one reason: to provide monetary compensation to a principal if you fail to live up to your obligations. This money allows them to seek restitution for their losses and seek another party to finish the job. Meanwhile, you are on the hook to repay the bond if you have to use it—it’s a loan, not insurance.

Payment Bonds

Payment bonds fall under the category of liens. They are used much more frequently than performance bonds are. Anyone who provides labor or materials to a bonded project can file a lien against these kinds of bond. This allows them to file a claim against the bond if they don’t receive payment as agreed under your contract with them.

Getting Your Project Bonded

The difference between a performance bond and a payment bond is fairly straightforward. If you think of your project as three tiers with you in the middle, the principal at the top, and the vendors, suppliers and subcontractors at the bottom, the performance bond covers the top, and the payment bond covers the bottom.

If you’d like more information about these two types of bonds, and how you can get started fast and easy, National Surety Services, Inc., can help. Check out some more information about the bonding process, and contact us to get started today.

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