When you’re looking for a contractor bond what are you looking for? We are one of the foremost bonding companies in California that deal with multiple bonds. We can look at a few options and take some time to review what may be the best choice for your company. In most cases, there are four types of bonds, we can explain to you which ones you may need.
License Bond
Knowing what you need is key. One of the first types of bonds to discuss is a Contractors License Bond. In California, it is a requirement to obtain a $15,000 license bond or the equivalent to that bond. This is for the financial benefit of the employees and customers. This is great for the use of any harm that is brought on by a contractor’s actions.
Bid Bond
There is also a Contractors Bid Bond. A bid bond is more for a contractual agreement. Basically, a bid bond gives assurance to a contractor for a contract awarded to a particular job. Bidding begins and terms are then negotiated until both parties come to an agreement. This will give the awarded contractor and owner a binding agreement for any certain job. Here is how they work.
Performance Bond
With the next bond called a Performance Bond basically, does as the name states. This is an agreement that a job that has been awarded to a contractor will be completed. Not only completed it will have negotiated terms that will have to be completed as per an agreement between the owner and contractor. This bond can be payable under certain circumstances. Most cases of unfortunate events or natural disaster that may cause an insolvent contractor may stop the work of a job and therefore voiding the agreement.
100k LLC Worker/Employee Bond
With this type of bond of $100,000 it directly coincides with the LLC (Limited Liability Company) registry. If there is a business registered under the LLC there is a required bond equivalent or exact of 100k. This is an agreement that will assure payment to the employees of said contractor if payment can not be fulfilled. Basically a safety net for many contractors.
There are four very commonly used bonds and a little bit of info about each of them. The only issue would be knowing what type of bond an owner will need for any jobs looking to be awarded to a contractor. Once that can be decided, coming to an agreement between all parties involved should make for smooth sailing on the bond front.
