What are performance Bonds in Arizona?

What are performance Bonds in Arizona?

Performance bonds in Arizona are a way to guarantee obligations between two parties will be fulfilled. Commonly known as surety bonds, they are requested of a business when a contract or project is contingent on several variables. A construction company, for example, is usually required to procure a contract bond when doing business with a state, or the federal, government. If the company cannot complete the contact, the bond is used to cover the losses experienced by the other party involved in the contract.

A municipality has hired a company to build a central park, for example, and a deposit has been paid to cover initial planning as well as materials. If the company suddenly goes out of business or cannot complete the job, the municipality is reimbursed the deposit. Performance Bonds in Arizona are underwritten by insurance companies but are not exactly insurance. Both bonds and insurance policies are priced, approved, or denied based on risk and credit history, but serve different purposes. An insurance policy protects the business that pays the premiums. A bond protects the other entity against failures by the business that pays the premium.

In most cases, claims against a performance bond are never filed. Work is completed, both parties are satisfied, and the bond term expires. Bond premiums are typically a one-time cost and are available for many reasons across a variety of industries. In addition to the many types of construction bonds, there are probate and court bonds, janitorial service bonds, motor vehicle dealer bonds, notary bonds, as well as lost and defective title bonds, among others. Established businesses can often get bond approval within a few days, if not the same day.

There are not many obstacles to getting a bond application approved as long as the application is completed in entirety. Some applications can require massive amounts of documentation and be complicated to fill out. Forgetting to include a particular element or making a mistake on the application can result in a delay or the bond being denied. Securing the services of an experienced bond writing company can expedite the process. Business owners can click here for detailed information regarding bonds, pricing, the process, and to receive a free quote.

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