Thursday, January 10, 2013

Bonded and Insured: What's the Bond for? Performance Anxiety!

Do you suffer from Performance Anxiety?  Heh heh...

From Wikipedia:

A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.

If the contractor doesn't complete the work, usually because of bankruptcy, then some money can be recouped.  In CA, Contractor's bonds are for $12,500 usually.  You give a contractor $20,000, but he goes out of business, and doesn't complete the job.  You could could collect $12,500 from the bond.  More complicated, but that's the gist of it...

Performance anxiety... but...

Though normally associated with Contractor's, performance bonds are needed in other industries, like Pest Control.  I had client who's employee was signing subcontractor contracts in the owner's name.  Total forgery, and illegal.  The Bad Employee then took CASH.  The work obviously was never performed, so the GC's went after the Business Owner.  His Bond company had to get involved.  (Luckily, it worked out for the Business Owner...)

This is DIFFERENT than negligence and liability... the "Insured" part. 

If you hire a contractor, or subcontractor to perform work, and you are worried about that work actually getting done, then make sure the company/individual you hire has a bond.  Ask for the bond#.

So, remember, with a's all performance!  (^_~)

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