1)A performance bond is money posted by a developer with a
municipality while he completes a project. When the project has been
completed to the municipality's satisfaction, the money is returned.
In some cases, the town's officials can use the money to complete the
outstanding issues if the developer refuses to address them.
2) Performance Bonds - How times change
Posted by Riskwriter on August 25th 2004 to Surety News, Performance
Bonds, Contract Bonds
Turning back the clock
..and bond agents working for a living.
Do you recall the late 90's and way early in 2000 when getting
approved for contractors Performance & Payment bonds were as easy as
having a pulse? "Oh, you're breathing? You're approved!" That time
period was an interesting but a rather frightening time in the surety
industry. All the bonding companies began to become more and more
competitive in this dog eat dog industry, so much that sureties were
giving things away to contractors! Waving your spouse from the
agreement? SURE! waiving personal indemnity all together for that
matter! Dropping rates down to $6 per thousand
.the list goes on.
Since the sureties have exceeded losses in the past couple years more
than the losses they had throughout the whole past decade, has forced
them to re-group themselves. Underwriting has taken an entire swing
the other way and is incredibly conservative in all spectrums of
underwriting. Aggregate bond lines have been sliced in half, rates
have doubled, the re-insurers even writing surety have dropped to a
measly 10 and all of this is all a snowball effect of one thing
affecting another. However, In the end, it does change the industry in
a positive way.
For one thing, it means that any contractor OR sub-contractor with a
Performance bond in hand for the guarantee of their contract, likely,
truly is qualified to get that job done-AND will get it done per the
terms of their contract.
The obligee (who is requiring the bond) won't feel the reluctance in
accepting a bond as they may have in the soft bond market previously
due to the soft underwriting that was occurring. Previously, many
contractors still defaulted on jobs, and did so more willingly with no
personal indemnity on the line.
Now, there is a rigorous underwriting process that each contractor
must face. And there should be! Applying for a bonding line of credit
and or Performance bond is just like applying for a line of credit
from your bank. It is CREDIT. In this case, it's not simply just to
pay back a loan but to actually perform on a contract. Of course, with
this type of guarantee the bonding company must make, their research
into each contractor is complete.
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/AsburyPark/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/AsburyPark/join
(Yahoo! ID required)
<*> To change settings via email:
mailto:[EMAIL PROTECTED]
mailto:[EMAIL PROTECTED]
<*> To unsubscribe from this group, send an email to:
[EMAIL PROTECTED]
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
