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How Contractor License Bonds Protect Consumers


As a customer, you ought to be aware of the bonds made available by government agencies for your protection. If you need to hire a contractor to work on your home on a construction site, be advised that it does come with some risks. Even if the contractor has a clean profile there is still a probability that he may default or fail to deliver up to the client’s expectations. In other instances, substandard work translates to monetary loses on the part of clients.

In severe cases, some contractors have succeeded in throwing clients and customers into liabilities that they never envisaged. Customers may even be forced into unnecessary lawsuits arising from negligence to duty. This is the reason why contractor license bonds were introduced.

Here are some reasons why contractor license bonds protect customers should the unexpected occur:

1. Contractor bonds make sure quality service make.

We can’t overemphasize how important contractor bonds are to quality service delivery. Ideally, every business is under obligation to deliver quality goods and services to clients with respect to good workmanship, quality building materials, and final product delivery to customers and clients. A contractor bond which is a form of surety bond ensures that contractors are held accountable for their performances and service delivery.

A customer can file for claims against the contractor bond if he or she is dissatisfied with the construction or renovation work done by the contractor.  The surety bond serves to protect the customer from any loss suffered or incurred due to unsatisfactory service rendered.

2. The contractor bond ensures that work is completed at the stipulated time.

Contracts are often given out to be completed within a specified timeframe.  Failure on the part of either the contractor or client to meet up to the specified timeframe can lead to serious inconveniences and monetary loss. In other to protect buyers from shoddy practices and untimely service deliveries, surety bonds ensure that the deadlines for construction projects are meant. Furthermore, if uncertainties lead to delays, surety bonds ensure that time adjustment is made in favor of the client.

3. Contractor bonds ensure that customers are compensated.

Contractor bonds ensure that customers are compensated in should the contractor fail to deliver on the construction job as agreed. This compensation is usually in monetary terms. Ideally, dissatisfied clients will seek monetary compensation directly from the contracting firm and if all efforts fail, they will proceed to the state’s contractor board to file a claim. The state’s contractor board will investigate the matter and approve a contractor’s claim for losses incurred if they find out that the contractor defaulted in dispatching his or her obligations.

4. Businesses are screened.

The use of contractor and surety bond ensures that only qualified businesses are allowed into the industry. Most states in the U.S now require that contractor bonds be issued before construction works are undertaken. The process of obtaining a surety bond helps the state weed out bad actors from the system, thereby protecting clients from potential losses.  Contractors who manage to secure bonds are under oath to provide the best service to customers. Don’t fail to meet the right professionals if you need contractor license bond California.

Can the Contractor of Surety bond also protect business?

Emphatically yes. Although, these bonds might appear to as an unnecessary expense to business owners and contractors they do offer some long-term benefits to contractors. One of the obvious benefits surety bond offers is that it adds an extra layer of trust for contractors. Customers are more willing to contract jobs to businesses that are licensed and bonded to operate within their locality. This is the reason why it’s imperative that contractors get the appropriate license to operate. Trust in this sense is multifaceted, in fact, the more “public trust” a contractor has the more projects he will win.

A key benefit of contractor license bonds to contractors is that they help to regulate the industry by pushing out bad actors with the intention of soiling the reputation of others. Unethical business practices are thrown out the window while capable hands are retained. If not for surety bonds, unlicensed contractors will flood the market with substandard products and low bids that will knock genuine contractors out of operation.