{"id":1267,"date":"2021-08-25T21:12:17","date_gmt":"2021-08-25T21:12:17","guid":{"rendered":"https:\/\/www.performancesuretybonds.com\/blog\/?p=1267"},"modified":"2022-01-24T16:03:31","modified_gmt":"2022-01-24T16:03:31","slug":"when-should-a-general-contractor-require-subcontractor-surety-bonds","status":"publish","type":"post","link":"https:\/\/www.performancesuretybonds.com\/blog\/when-should-a-general-contractor-require-subcontractor-surety-bonds\/","title":{"rendered":"When Should a General Contractor Require Subcontractor Surety Bonds?"},"content":{"rendered":"\n

Subcontractors are a critical tool for general contractors. When a general contractor doesn\u2019t have the time, people, or skills to complete a component of a project, they hire a subcontractor to do it for them. Enlisting subcontractors makes it easier to complete projects on time, on budget, and up to quality standards. <\/p>\n\n\n\n

However, there\u2019s also a risk in relying on someone else to do the job, which is why subcontractor surety bonds are used to guard against that risk. So when should general contractors require subcontractor bonds? That\u2019s what we\u2019ll cover in this blog.<\/p>\n\n\n\n

What is a <\/strong>Subcontractor Surety Bond<\/strong>?<\/strong><\/h2>\n\n\n\n

General contractors need to obtain a number of different types of surety bonds<\/a> before finalizing most construction contracts. Those bonds hold the general contractor financially liable if he doesn’t meet the standards for speed, cost, quality, or conduct. Subcontractor bonds (also called subcontractor performance bonds) work much the same way. If a subcontractor fails to perform as expected, the subcontractor surety bond holds them financially liable for damages caused to the general contractor. <\/p>\n\n\n\n

Why are <\/strong>Subcontractor Surety Bonds<\/strong> Required? <\/strong><\/h2>\n\n\n\n

General contractors use these surety bonds<\/a> as protection against risk. Specifically, the risk that a subcontractor causes financial damages by, for example, going over budget or missing deadlines. Surety bond agreements hold the bonded principal (in this case the subcontractor) financially liable, which creates a strong incentive to meet the performance standards required by the general contractor.

And since the surety agency that backs the bond guarantees payment for valid claims against the bond, the general contractor knows he has a way to seek and receive compensation for damages. Surety bonds create trust between two parties – a general contractor and subcontractor – by making one accountable to the other. <\/p>\n\n\n\n

When are <\/strong>Subcontractor Surety Bonds<\/strong> Required?<\/strong><\/h2>\n\n\n\n

The general contractor decides when they\u2019re required, how large they must be, and what performance standards they hold a subcontractor accountable for. However, subcontractor surety bonds aren\u2019t always necessary. Some general contractors waive the bond requirement on small, quick, or minor jobs. When they are required, it\u2019s important to seek out a subcontractor surety bond ASAP. Work can\u2019t move forward without one. Partner with Viking Bond Service to fulfill surety bond requirements fast and hassle-free. <\/p>\n\n\n\n

What\u2019s the Difference Between a Performance and Payment Bond<\/strong><\/h2>\n\n\n\n

A subcontractor performance bond isn\u2019t the same as a subcontractor payment bond, which is another common kind of construction bond<\/a>. The differences between the two are as follows:
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