Arkansas HVACR NewsMagazine January 2024

ARHVACR NewsMagazine January 2024

S tate, National, Chapter News State national Chapter News

Bonds: not Barry, not bail Just SURETY

K yle Schnebelen, CLCS Cross Pointe Insurance Advisors

principal fails to meet the obligations of the contract, the surety will step in to ensure that the obligee is compensated for any losses incurred. I like to think about the surety bonding process as a grandfather, father, and son. In this analogy, the grandfather is the oblige or the government entity, the father is the surety, and the contractor is the son. The son just started a new excavation business and is approaching grandpa about doing some dirt work on the farm. The old man wants to help his grandson, but he was a young man once and knows that sometimes you get spread too thin and accidents happen. So, what does he do? He approaches his son, to ask for his word to guarantee that the grandson will get the work done on time and without issues. The father agrees and says, if equipment breaks, I will rent new equipment and if the dozer operator doesn’t show up, I will do the work myself. And if for some reason he does not have enough funds to pay that operator to show up, I will cover that as well. Why is Surety Bonding required for HVAC jobs? Well, simply put, HVAC is one that involves a significant amount of risk, and that is why this process was put in place. Ultimately, it protects the Kyle Schnebelen, CLCS

Surety bonding is an important aspect of the construction industry. It helps protect both contractors and clients in case of unforeseen circumstances. In this article, we will discuss what surety bonding is and why it is important. Well, what is surety bonding and why do I need to know about it? • Bid bonds - A bid bond is required when bidding on a project. (they cost nothing) It guarantees that the contractor will enter into a contract if they are awarded the project. • Performance bonds - A performance bond guarantees that the contractor will complete the project according to the terms of the contract. • Payment bonds - A payment bond guarantees that the contractor will pay all subcontractors, laborers, and suppliers involved in the project. Surety bonding is a government required contract between the surety (the bonding company), the principal (the contractor), and the client, which is called an obligee (the government entity). The surety provides a guarantee that the principal will fulfill the terms of the contract. Fun fact, the legislation that made this a requirement nationwide was first sponsored by an Arkansan, John Elvis Miller. If the