Groundwork, a Publication of the Landscape Contractors Association MD DC VA
At some point most contractors are required to purchase a bond, usually a license or contract bond. Some forethought and preparation can make the bonding process smoother and less stressful. Bonds are usually provided by the same companies that provide for your other business insurance needs. What most people don’t understand is that a bond is like a loan; if an insurance company/surety pays on your behalf they will expect to be reimbursed. A brief discussion of the bonding requirements, the types of bonds and the parties to a bond might be helpful.
There are three parties to a bond/surety agreement: the principal, which would be the contractor performing the work; an obligee, which would be the building owner or general contractor that you are working for; and the surety, who would pay the obligee in the event of the contractors default.
