#maintenance bonds

Construction work is never easy. And when an employee is injured, it can be anything from a few day’s absences to that person having to resign or even file for disability. This unfortunate loss of good employees can also lead to project delays or hiatuses. Fortunately, there are ways that both workers and contractors can drastically reduce injuries. Based off data from the Bureau of Labor Statistics’ (BLS) 2015 Survey of Occupational Injuries and Illnesses, this guide from NSSI explores the three most common construction injuries and how to prevent them.

Note: the following injuries were nonfatal injuries and illnesses that involved days away from work.

Materials and Parts

According to the BLS, Injuries caused by building materials and part accounted for more than 14,000 injuries. The primary causes were metal pipes, lumber, ducts and fasteners such as nails and screws. Even electric parts such as extension cords and wiring lead to injuries.

To prevent materials and parts-related injuries, workers should always be mindful of their environment while moving materials on site. Any equipment not actively being used should be unplugged or depowered. Everyone present on the job site, whether a subcontractor or project manager, should wear protective equipment as steel-toed boots, hard hats and safety glasses.

Worker Position or Motion

More than 11,000 incidents of construction injuries occurred when workers had self-inflicted accidents, caused by their physical position or a movement such as bending, reaching or climbing. Reaching too high without an assistive device, climbing without the proper equipment or bending down to search for a fastener are examples of this type of injury.

Good posture helps prevent many motion-related injuries. Workers should perform stretches before beginning their shifts. Sitting instead of kneeling or squatting can decrease the chances of back-related injuries. Employees should also refrain from making abrupt movements to help them avoid sprains or muscle strain. They should also never carry heavy objects while climbing.

Hand Tools

Non-powered hand tools surprisingly cause more construction injuries than powered ones. Knives and other cutting tools, along with digging and striking tools such as hammers, were among the major sources of injuries. Among power hand tools, tools for boring and cutting, such as drills and power saws, were the major sources of injuries. Both types of hand tools resulted in more than 9,000 total injuries in the survey.

Hand tool accidents can be reduced by using tools only for their intended purpose. Hand tools should be regularly inspected to be certain that they are in good condition and working correctly. Workers should always don gloves, hard hats, and other personal protective equipment (PPE) before using any hand tool.

The Miller Act and Little Miller Act are must-knows in the world of contractors and construction. Many contractors have heard of the two, but at NSSI we often find that not everyone fully understands what is involved with them. Not knowing could cost you a job, or even your company, so it is essential to comprehend how they apply to you in your state. If you don’t know how the Miller Act affects you, read this guide courtesy of NSSI.

Explanation of the Little Miller Act

There are two statues: the Miller Act and the Little Miller Act. The Little Miller Act statute only applies to some states, but Connecticut is one of them. The Little Miller Act of Connecticut refers to filing a lien on a state construction project, on which you file said lien pursuant to the Little Miller Act of Connecticut.

Unlike other claims, this claim is not filed against state property; rather, it is filed against a specific posted bond. This bond centers on the Miller Act, which requires by law that all contractors working on state projects post surety bonds. If the contractor does not provide the work promised in the surety bond, or the client is dissatisfied with the contractor’s work, the client of the project can authorize a lien on a posted bond.

The Types of Surety Bonds You Need

The surety bonds needed to work on a government or state project depend on the state where the work is being performed. Often, contractors need a payment bond, performance bond or both. According to the Connecticut State Land Board, the required types of surety bonds are specified in the contracts for the project.

A payment bond guarantees that the material suppliers and any subcontractors working on your project will be paid, even if you cannot complete the project. With the Little Miller Act, payment bonds give workers without a direct contract with the original project contractor provide an alternate source of payment.

State governments require these payment bonds to avoid leaving the project workers shortchanged. If there were no payment bonds, both the contractor and the government workers would be at risk for litigation. All public works projects require both payment and performance bonds in most cases.

Performance bonds ensure that all project performance is completed by the contractor. If the contractor does not follow the terms of the performance bond, state projects may be delayed for weeks or even years. This results in the state having to pay for new contractors, which can drastically raise the cost for the project.

However, a performance bond also protects the contractor. If the state asks for work that is not in the contract or makes changes to the work or pricing, you can use the figures and scope of work in the surety bond as proof otherwise. You cannot be accused by the state government of unsatisfactory work or defaulting on the project if the work was not part of your bond.

Provisions of the Little Miller Act

If a material provider or subcontractor does not get paid under the terms of the payment bond, or if the terms of the performance bond terms were not met, the claimant has a specified time frame within which to make a claim against the bond. Typically this claim is when a lien against the project takes effect. This provision allows the original contractor time to work out a resolution.

Conclusion

The Miller Act and Little Miller Act are essential to know and understand, for contractors, government project bidders and construction workers. They ensure that contractors and those working with and for them know what is at stake in all state-level projects. Contact NSSI to learn more today.

With millions of dollars at stake in maintenance and construction projects, it’s vital that government purchasing officers understand the importance of surety bonding for these undertakings. Two insurance executives recently made an educational presentation on how this practice provides the risk management these officials need.

The presenters explained how requiring bonded contractors offer critical advantages for public officials. The most significant of these benefits include:

Prequalified contractors: all bonded applicants undergo careful assessment by surety underwriters, declining contractors that have poor finances or bad work track records.

Contract completion: surety bonding allows intervention in the likelihood of a contractor default. If a default occurs, the bonds allow for identifying alternative contractors and may also pay any applicable difference in fees.

Supplier and labor payments: sureties mean guaranteed payment to suppliers and laborers if the contractor does not pay for supplies or work performed.

Bonding isn’t just a benefit that offers protection from bidders for federal contracts. It’s also the law. Under the federal Miller Act, all federal contracts that are greater than $150,000 must be bonded, in addition to any other requirements that are held by the state and local governments where the work will be performed. Public officials can also choose to set up bonding requirements of their own for contracts that range from $30,000 to $150,000.

So what kinds of surety bonds are available that are particularly beneficial for government projects? There are four types:

Performance bonds: a performance bond provides government officials that use the standard contract bid and award procedure with a guarantee if the contractor defaults. In this event, the bond will fulfill the contractor’s obligations as given in the bond. This usually involves completing the contract by finding another contractor and/or paying any contract-stipulated financial penalties.

Payment for materials and labor bonds: these types of bonds ensure that specific material suppliers and subcontractors will still be paid if the contractor is unable to meet the payment obligations.

Bid bonds: a bid bond screens unqualified bidders out, as well as providing government entities that used the contract bid and award process with a way to recoup the cost of having to repeat the bidding process, should the winning bidder be unwilling or unable to supply required payment and performance bonds.

Maintenance and warranty bonds: these bonds guarantee that the contractors shall correct any defects in materials or workmanship within a specific time period after the project’s completion.

Such presentations are part of the ongoing efforts of surety and insurance services, such as NSSI, to educate public and private sector risk management and financial executives on how bonding protects their organization’s best interests.

Whether you are a client or contractor, you might find bonding capacity confusing. If so, you are not alone. Many people are confused regarding what bonding capacity is and when, if or why they need it. If this describes you, let our quick and easy primer demystify the bonding capacity process for you.

What is Bonding Capacity, Exactly?

Bonding capacity refers to the limit of bonds a contractor can issue on any job or contract. Bonds are issued on a per-project basis, so this limit is almost ironclad. When hiring a contractor, bonding capacity is one of the first issues a client should address. Along with that, he or she should ask about the aggregate limit. Aggregate limits refer to the absolute maximum number of bonds a contractor can have for any one project. The aggregate limit can include both bonded and unbonded contracts, so clients should go over each separate contract carefully.

Aggregate limits are usually comprised of three different amounts. The first encompasses the cost to complete any started projects. If your contractor starts one project, then leaves it briefly to begin another, his or her aggregate limit will encompass remaining costs on the first project. Additionally, the aggregate limit includes complete cost amounts on any contracts your contractor has signed but has not begun the projects for. Finally, the aggregate limit includes any contract amounts for bids your contractor has received but not awarded.

How Do These Limits Help Clients?

Surety bonds, aggregate limits included, are designed to protect clients. Bonding capacity lets you the client know exactly what your contractor is willing and able to do on a project, and what bids he or she is willing to accept. If the project goes wrong, you can point back to your contractor’s bond as evidence that what was promised was not delivered.

For example, let’s say your contractor promised to accept your company’s bid for a certain project. A few weeks later, he or she returns and says the bid will not be accepted because another company bid higher or lower. At that point, refer your contractor to his or her bonding capacity. Bonding capacity, specifically the aggregate limit, requires your contractor to apprise you of all bids that are still under consideration or not yet awarded.

Bonding capacity also assures you a contractor and his or her company are well-prepared to handle your project. Surety bond companies review several factors before giving a contractor bonding capacity. These factors include but are not limited to the company’s financial strength and available credit, banking history, credit scores, project references, current work and the financial strength of close competitors. As a client, you may ask for details on any of these factors when examining your contractor’s bonding capacity. Like aggregate limits, these factors are designed to protect the client from pitfalls like a company going into bankruptcy or having poor references.

Does Bonding Capacity Protect Contractors?

Yes. Bonding capacity keeps contractors from getting overwhelmed with projects or selling themselves short on bids. In addition, bonding capacity keeps contractors apprised of how their companies are doing. For example, if you are a contractor whose company has poor references or is not getting much work, you can use that to decide which if any projects to accept. If you notice a competitor is financially stronger than you, use that knowledge in your bond to apprise your company and help make changes.

Conclusion

Bonding capacity is often thought of as something that helps only the contractor or client. In reality, both parties benefit from it, and it is needed for every project or bid a client and contractor team might encounter. Always ask about bonding capacity when you are contracting for a company or trying to complete a project.

If you want to be a successful contractor in the United States, you’re going to have to deal with surety bonds. The bonding process can get pretty confusing which is why it helps to do a little research before you buy. One of the most common things you’ll run into when researching surety bonds is Little Miller Act.

California’s Little Miller Act is essential for all surety bond business in the state, so if you plan to do any contract work there, you need to understand what’s involved. Learn more about the California Little Miller Act and discover how your surety bond prospects are affected.

Little Miller Act Basics

Just about every state has their own version of the Little Miller Act. The name is an offshoot of the federal Miller Act which requires contractors to use performance bonds and payment bonds to ensure that contracts are completed correctly and that all subcontractors and material suppliers are paid.

The specific provisions of the Little Miller Act vary from state to state, but they all hold the same requirements for contractors. Performance bonds cover any potential financial loss should the contractor fail to do their job correctly or leave it unfinished while payment bonds ensure that vendors and subcontractors get paid one way or another. Overall, it keeps contracting business open and reliable.

Benefits of Performance and Payment Bonds

Little Miller Acts are designed to protect the industry as a whole. While contractors may feel like performance and payment bonds are a burden, they actually come with quite a few benefits. With a performance bond in place, it becomes much easier to get subcontractors on board knowing they don’t have to bear the financial weight of an incomplete project should the contractor’s company fold.

Payment bonds also make it easier to get vendors and subcontractors to work for you. One of the greatest fears in the construction industry is not getting paid for the work put in, but payment bonds ensure that all subcontractors and material suppliers get paid in the end in somehow.

California Little Miller Act

When working in California, you need to know what the California Little Miller Act dictates to make sure you’re in compliance. When getting a performance bond, the bond needs to cover the entire price of the contract. Payment bonds are only required when a public work contract is more than $25,000 and they typically cover half of the contract amount. Architects and engineers aren’t required to have payment bond protection.

Remember that the Little Miller Act isn’t to protect you, but rather to protect your subcontractors. If you’re not paid for public works, then your issue is with the government. The Little Miller Act only dictates how subcontractors can make a claim after not getting paid to either the contractor or the surety bond itself.

Performance and Payment Bonds With NSSI

Now that you know a bit about the California Little Miller Act, you might be in need of performance and payment bonds for your next project. For a service and results based approach, National Surety Services Inc is happy to help. Contact us today to start your California surety bonding process!

Contractor bonds are essential in the construction industry as they bind the construction company, the company’s client and the surety together. They are essential for keeping everyone accountable for the agreed upon project. You’ll be hard pressed to find a project that doesn’t require a contractor bond to get on board.

Remember that contractor bonds are there to protect the public, not the construction company, so they can be seen as a bit of a burden for contractors. However, they still help by validating your credibility and setting you apart from the unprofessional competition who promise low prices but fail to deliver. That’s why it’s so important to factor in the cost of a contractor bond with your budget. Here are the key components in determining how much does a contractor bond cost.

Type of Bond

Contractor bonds come in many different shapes and sizes, and the cost largely depends on what specific kind of bond you’re trying to get. Take bid bonds for example. These bonds are required if you even want to be in the running for a contract, so they’re generally less expensive than other types of bonds.

Performance bonds, on the other hand, ensure that a contractor will get the job done correctly. With more at stake, the protection tends to cost a bit more. While a bit bond will typically only put you back about $100, a performance bond can cost anywhere between $500 to $2000. Make sure you know the type of bond you need and the average cost for each before you buy.

Amount of Bond

You get what you pay for, and a bond that covers a greater amount will cost more. This is largely why the discrepancy between bid bond and performance bond prices exists for example. A bid bond just has to cover the cost of your bid which might be a few thousand dollars while a performance bond for an entire project can cover up to millions of dollars.

To get a contractor bond, you have to pay a percentage of what that bond covers. Even if you only have to pay 5% on a performance bond, that’s going to cost you a lot more than 5% on a bid bond since performance bonds cover significantly larger amounts.

Your Reliability

The last and probably most important component in determining how much does a contractor bond costs is you. Surety bonds don’t exactly work like typical insurance, but they still rely on dependability, and yours is determined in quite a few ways. The most obvious is your credit score. The lower your credit score is, the more you’ll have to pay for a surety bond. For example, a bad credit score may have you paying 10% on a contractor bond while a good credit score would drop that to 1%.

Your character is also taken into account. If you have a shady financial history or just seem generally untrustworthy, surety providers aren’t going to put much stock into any contractor bonds you get. That’s why you need to do everything in your power to decrease your perceived risk before you opt for a contractor bond.

Get Your Contractor Bond with NSSI

These are the components we use when determining how much does a contractor bond cost, so you know what to expect. However, we offer the most competitive prices in the industry and base our work on service and results before anything else. When you get your contractor bond with National Surety Services Inc, we act as your partner, not simply your provider. We don’t succeed unless you succeed. Contact us today!

We all know the importance of being bonded as a contracting business. It’s a safety blanket for you and for your principal in case things go bad on the job. It’s a sign of confidence that you have the ability to stand behind your word and your work. It’s a good faith manner of binding you to the principal and ensuring that all contractual obligations are met.

Different bonds, however, will carry different premiums, and it can help when budgeting for your bonding process to know the things that will affect this premium. Explore some of the most significant and important factors that go into determining how much does a surety bond cost, and where to find help getting bonded.

How Much Does a Surety Bond Cost? You’re not the only business owner who has wondered how much does a surety bond cost. The truth is, there are many factors that go into the premium, and two different companies pursuing the same bond could pay different costs for it. These factors include the type of bond, government agency variances, your company’s credit records and finances, and your need for financing.

Type of Bond Pursued Individual surety bonds can have greatly variant costs based on the bond type you’re pursuing. Notary bonds, for example, might only cost about $100, while a multimillion dollar performance bond for a government project could run tens of thousands of dollars. Usually, a surety bond’s premium will be valued at a percentage of the type of bond, which can vary based on the risk factors involved.

Government Agency Variances

Usually, you will be pursuing a bond because you’re required to by a government agency as part of getting licensed to bid on a big public job. Every state enforces different regulations, with these state laws outlining the exact bonds required for different jobs. Some laws might allow bonds to vary widely on each individual case. Contract bonds, for instance, are almost always valued on the size of the bid, while commercial licensing bonds may be standardized in cost.

Credit Score and Finances

Just as with any loan (which is really what a bond is—a pre-guaranteed loan), a surety bond is granted based on your credit rating. The surety company will put you through a background check which helps them determine the appropriate rate to charge. They’ll look at your financial records, work history, credit review and bond history, among other things.

The Need to Finance the Bond

Many businesses don’t have the money up front to pay the premium for a bond, which creates a Catch-22. You need the bond to bid on a project to make money, but you need money to pay for the bond. It’s possible in some cases to finance the Premium and pay over time, but you will pay more in the long term as a result.

Easy Surety Solutions

Your best first step in getting bonded is to reach out to a respected bonding agency like NSSI. For over two decades we’ve helped businesses of all sizes get bonded fast and easy, and we’ll do the same for you. Get in touch with us for more information about how much does a surety bond cost today!

Many people are surprised the first time they seek a bond, to discover that collateral can become a vital part of the process. Since in many ways, a bond is more akin to a loan than to an insurance policy, bonding agencies can often desire something against which they can secure the services they offer. That’s collateral.

But what is acceptable as collateral under a surety bond? There are a number of different options available. Check out three different types of surety bond collateral that might become essential in order to secure and complete your bonding process.

Surety Bond Collateral

Surety bond collateral forms a sort of security deposit against the bond. It’s put up by the principal (the bond applicant, or you) to reassure the bond company, or surety, that you have the credit and capability to repay the bond, should you need to use it. It reduces the risk the surety holds, as well as their exposure.

Things the Company Considers

There are four general aspects that a surety will take into consideration when accepting an application for a bond. These are the type of collateral, the required value of the collateral, the time of release, and the kind of protection offered by the collateral.

The three most common and widely accepted forms of collateral for a surety are irrevocable letters of credit, certificates of deposit, and fixed assets.

Irrevocable Letters of Credit

The safest and preferred form of collateral across the board are irrevocable letters of credit, or ILOC. These are usually issued by a bank, and are also sometimes called Standby Letters of Credit. They are awarded based on the bond applicant’s current financial standing, and serve as a contract between the surety and the bank, where the surety is a beneficiary.

An ILOC, in brief, promises that the bank will pay the surety if needed, via a loan issued to the bond applicant.

Certificate of Deposit

A certificate of deposit is another form of collateral that is fairly widely accepted. It’s more commonly known by its abbreviation, or CD, and is provided by a local bank and backed by the FDIC, or Federal Deposit Insurance Corporation. These certificates all the bank to retain the money for a certain length of time, allowing them to gain interest on return, while they guarantee repayment at the end of this term.

Fixed Assets

Fixed assets include real property and can be anything from heavy equipment to buildings or land. To serve as collateral, they must undergo a professional appraisal, they must be insured, and they must not be encumbered in any way, such as by a lien. In general, this is to make certain that a company not only puts up property of proper value, but that they don’t try to use the same property as collateral against two different bonds.

National Surety Services, Inc.

If you’re in need of the best surety bonding services around, or you just have questions about which (if any) collateral you’ll need, explore the NSSI website, read about the services we offer, and contact us for more information today.