Richardson, TX (PressExposure) June 17, 2009 -- A contractors bond is an obligation or a fiscal assurance that the contractor will complete a contracted project based on the provisions of an agreed contract. In the event that a contractor fails to deliver the project laid out on the contract, the bond will be used to compensate the project owner for losses incurred. Included in contractor's bond are P&P bonds or payment and performance bonds. These types of bonds indicate that the contractor has the capability to finish the job and pay subcontractors, suppliers, and other entities involved in the project.
You have to apply for a contractors bond from a licensed surety bond agency. The surety agency will back you up through the bids and P&P bonds that you posted. If ever you fail the project, the surety company will facilitate the compensation procedures. Your success therefore is also in the best interest of the surety company. Because once you fail or your contracting business goes under, the surety company is obligated to compensate all parties that have been adversely affected by your failure. That is why surety companies normally demand stringent requirements for contractors applying for P&P bonds.
The procedures of surety companies in providing contractors bond differ from each other. However, there are general rules and steps that will be applicable for all situations. For example, a surety company normally verifies the core competencies and primary skills of a contracting outfit. So you have to expect that a background investigation on your company's performance and competency will be checked by the surety company. The surety will also check if your company can qualify for the requirements demanded by project owners. Your company's track record in paying subcontractors will be investigated by the surety company particularly on matters related to P&P bonds concerns.
You will be required also to produce financial statements if you are applying for a contractors bond. For a comprehensive contractors bond, you will have to submit a 3-year record of your financials to the surety company. The soundness of your business financials will be evaluated to ensure that your company will be able to finish the project and satisfy the owner and other parties involved in the project. For express bonds, the surety agency will usually rely on your credit worthiness. Aside from this, there are also several questions that you need to answer and show proof that your company is stable enough. Once these requirements are met, the surety can provide P&P bonds as well as bids and licenses bonds for you.
These are general qualification procedures only. Remember that some surety companies could have other procedures in providing surety bonds. If you want to enjoy simpler transactions, then you have to try the services of Baldwin-Cox Agency. Baldwin-Cox is the leading surety company in Texas providing excellent bonding services. It has years of solid experience in the business and generally considered as the most stable surety company in the state. You can check its website and call its service hotline so you can speak with its bond specialists and agents.