In the tender process, each bidding company is required to have a guarantor in the form of a surety bond issued by an insurance company. In addition to guaranteeing the certainty and trust of each party, financial insurance or surety bond serves as an attempt to take over the potential risk of losses that may be experienced by one party due to the violation of the agreed contract. Aside from that, visit http://californiacontractorlicensebonds.com/about/ if you wish to know more about contractor bonds.
In addition to the brief explanation above, here are the financial insurance sundries you need to know:
1. Condition of guarantee
There are two guarantee conditions contained in surety bonds. The first is a conditional bond, where the guarantee will be disbursed after the causes of disbursement are known. In a conditional bond, the guarantor is only required to replace the amount of the loss suffered by the obligee (project owner). The second is an unconditional bond, this guarantee condition provides flexibility for disbursement without having to prove a loss situation.
2. Benefits of surety bond
There are many possible losses that can happen at any time when you do business cooperation. Surety bonds can minimize risk potential with a variety of benefits, ranging from guaranteed bids, performance, advance payments, maintenance, bank guarantees, and customs bonds.
3. The obligation of surety bond participants
Learn well the bidding proposals submitted by insurance agents on guaranteed and non-guaranteed risks, requirements that must be met, and how to pay premiums. Complete and carefully fill in the form and other file completeness.
Surety bonds provide an alternative selection of guarantees in the construction of chartering so that contractors have the opportunity to use collateral at a lower cost. The existence of financial insurance like this also encourages a guaranteed market that is more competitive with banks and makes contractors or contractors more aware of the importance of insurance.