The Unseen & Unexpected

Surety bonds and construction insurance are an important considerations when starting a project and selecting a construction manager or general contractor.  Surety bonds are the structure by which a party will assume liability for the debt, default, or failure in duty of another.  It is not a loan and not insurance. The main purpose of holding a surety bond is to protect yourself as the owner/developer from default of your contractor or manager.  There are also different types on bonds such as contract, performance, and payment bonds each focusing on a specific aspect of the construction process.   While the Miller Act requires many public projects to have surety bonds, many private companies are more concerned with the bond ability of a company because it is a good sign of financial health - one of the major reasons for business failure. There is also the option of co-sureties which allow a division of contract obligations.  The important thing to remember when it comes to bonding is that it is negotiated within the contract and the cost should be considered and weighed against the benefit as is each aspect of the process.

The goal of insurance is to minimize risk and exposure.  There are many different types of insurance that are applicable to a construction project such as liability insurance.  Some of the more unlikely insurances might include vehicle insurance for construction equipment, insurance of materials en route, and replacement of materials stored on site.