Building or renovating a house is an exciting adventure but also an expensive one, especially now with the increases in both labor and material cost. If you are anxious considering all that might go wrong during the completion of the work during your project, ask your contractor to purchase a surety bond. Doing so could ease your worries and give you greater peace of mind during the building process.
Check with your contractor and if he does not offer a surety bond, he can obtain one from an insurance company/agency. However, your contractor will most likely pass the cost of that bond on to you. You’ll need to ask yourself whether the cost of the bond is worth less anxiety during the construction process. Getting one in place does take some time, so plan ahead and talk to your contractor before you need a bond in place.
How do bonds work?
- Performance bonds pay out if your contractor does not complete work outlined in your contract. An example: If before your project is complete, the contractor walks off the job and will not respond to any of your attempts to contact him to finish the job.
- Payment bonds pay subcontractors and material suppliers if your contractor refuses or cannot pay them. These bonds are also called Labor or Material bonds.
These types of bonds ONLY pay to complete work defined in your written contract. So, it is extremely important to know what is in that contract before signing it. If you are building a new home, get home insurance in place as soon as the home is completed. If doing a renovation of your home, speak to your insurance agent about what work you have done in case you require additional coverage. Your agent should know the specifics – if you have increased your square footage, added expensive countertops, cabinets, flooring, etc. All these factors influence replacement cost on your home.
Sanger Insurance services customers all over the North Texas area. Give us a call if you would like to get a bond in place for a new build or renovation. We would love to earn your business and your trust.