There are a significant number of risks that can occur when doing business, which is why Insurance Office of America (IOA) offers performance bonds designed to protect contractors. A subcontractor performance bond is a contractual agreement between a subcontractor and a surety that states that the surety will make arrangements for the work to get finished should the subcontractor fail to complete the project.
Advantages to Requiring Subcontractor Performance Bonds
There are many benefits to having subcontractors bonded which include:
• The surety can prequalify prospective contractors, evaluating their character, experience, and ability to execute the job, helping to eliminate unqualified subcontractors who are not fit for the project, or who may not perform well on it.
• Bonded subcontractors are more likely to take their job seriously and act more responsibly at a job due to signing a formal contract called the general indemnity agreement, which puts them at risk to lose both corporate and personal assets.
• Typically, on big projects, sureties will ask that contractors bond their subcontractors. Therefore, contractors that are familiar with the process will request that subcontractors be bonded without being directed to do so. This allows the contractor and the surety bond company to build and maintain a strong relationship in a complex industry like construction.
• Although the subcontractor bond is meant to protect the contractor and the business owner primarily, being bonded allows subcontractors to receive some support in case issues arise.
How to Obtain Your Performance Bond
Acquiring a performance bond is a simple process. First, you want to get a quote by calling IOA Bonds at 1-866-379-3151 or by filling out a bond request form on our website. We go beyond being bond agents and take pride in providing value and solutions to our clients. For more information about the performance bonds we offer, contact one of our surety bond experts today.