There are many businesses and professions that are looking to conduct business in the Garden State that may be required to produce a surety bond from a New Jersey surety company that can issue them a particular license or permit.
Plumbers, electricians, HVAC contractors, public adjusters and public officials are all required to be licensed and bonded in the state of New Jersey if they are planning to perform work on residential homes. The purpose of these bonds is to protect the public by ensuring each principle will conduct business professionally, abide by local ordinances, as well as hold the state and county government entities harmless.
The different types of bonds and reasons to acquire them
Bid bonds: Most public and many private construction projects require all contractors to guarantee their work and also honor their bid or proposal. The process starts with a bid bond during the project bidding process. Once a bid has been won, the next step in the contract awarding process is a performance bond.
Performance bonds: This guarantees the owner that the contractor or sub contractors on the project will complete the project according to the agreed terms. If either party defaults, the third party or surety will see the agreement through to an acceptable resolution.
Payment bond: The owner of the contract guarantees that the subcontractors and suppliers will be paid the monies agreed upon in the contract. For example, all those hired by the general contractor (a.k.a. the principal) will be paid should the principle fail to pay the subcontractors and suppliers directly. This is true on a private construction project where a general contractor is the principle on the project.
Labor & materials bond: These are usually issued in conjunction with performance bonds and cover payment for all equipment, labor, materials, and services in the event the contractor fails to pay for them under the terms of the contract.
Maintenance bond: This bond guarantees against defects for a specific time period following a project’s completion.
It’s also important to remember that bonds are time sensitive and critical to the success of your business, and you’ll need access to bonds as quickly and cost-effectively as possible. Speak to an agent working for a New Jersey surety company familiar with the bonding process.