Risk & Business Magazine Jones DesLauriers Insurance Fall 2015 | Page 25

Bonding with Your Contractor! How Surety Bonds Can Alleviate Owner and Contractor Risk BY: BENNY CHIAVETTI, ACCOUNT EXECUTIVE, JONES DESLAURIERS INSURANCE S urety bonds are, at their core, a promise between three parties – the Principal, Surety and Obligee. The Surety and Principal (the contractor) guarantee to the Obligee (the owner) that a loss will not occur. The surety company will pay the owner a specified amount of money if the principal does not fulfill their part of the contract.   There are different types of construction surety bonds that can alleviate owner and contractor risk. Three commonly used bonds are: bid, performance, and labour & material payment bonds. The first, bid bonds, are posted by a contractor for a submitted bid. They provide financial assurance that the bid was submitted in good faith and that the contractor intends to fulfill their responsibilities as outlined in the contract. The second, performance bonds, help to protect the project owner from a financial loss if a contractor fails to perform their duties. The third, labour & material payment bonds (also known as payment bonds), ensures that sub-trades or suppliers are paid and the project is kept free of liens. They are generally taken out by contractors for the benefit of the owner – often required under their contract. If you believe your project could benefit from the implementation of a surety bond, or if you are a contractor that requires bonding, I would love to speak with you and explain the process more thoroughly. Please send me an email at [email protected]. Benny Chiavetti is an Account Executive at Jones DesLauriers Insurance specializing in Bonding and Insurance within the Construction & Infrastructure Practice. He is a results-driven professional who has been in the financial services industry for over 18 years, and is experienced in relationship development, strategic planning and business growth. RISK & BUSINESS MAGAZINETM FALL 2015 25