Surety And License Bonds Alabama are a requirement, not only for licenses but also to bid for most projects, government or corporate. Bonds are more like an agreement between three parties; the principal who buys the bond and is held responsible in case of falling short of the contract, the Surety company which pays the amount initially in case the contract is not met and can later get it from the Principal, and finally, the oblige, the party which gets paid in case of a breach in the contract.
To put it simply, Surety And License Bonds Alabama, are a guarantee that in case of financial losses because of a contractor’s failure to complete the work, the project developer will be able to recover the financial losses.
Some of the most common types of construction bonds include:
Bid Bonds: Bid bonds are the bonds required for bidding on certain projects so that only the people seriously interested, with a true capability to complete the project, apply for it.
Contractor License Bond: A license or permit bond is a requirement for the contractors who want a license and start their own business.
Environmental Bond: This is a specialty bond that is in place to make sure that federal and state rules keep environmental damage in check.
Maintenance Bond: Providing assurance to the project developers against substandard materials and faulty workmanship, this bond is valid for a certain period of time after a project is completed.
Performance Bond: This surety bond assures that the contractor completes the project as per the contractual terms agreed upon.
Payment Bond: This particular bond is a protection for suppliers, subcontractors and others who may work with the contractor on a project. It offers protection to them in case an unforeseen event leads the contractor into bankruptcy, ensuring they get paid.
Site Improvement Bond: It covers the completion of improvements specified by a contract for updating existing older construction or properties
Subdivision Bond: A subdivision bond covers contractors who work on subdivision projects, i.e. building and/or renovating public structures within a subdivision.
Supply Bond: This is specifically for the suppliers of a project in case they are unable to provide the required materials, equipment, and other supplies as per the terms and conditions of the contract.