The Bonding companies think about all these senarios.

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PostPosted: Thu Jan 03, 2008 6:13 pm   Post subject:   

A bond would protect the person who hired your husband to do the work. It basically assures that the job will get done as planned. A General Liability policy does not cover work product.

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PostPosted: Fri Jan 04, 2008 3:23 am   Post subject:   

I have tried to help some agents with an inside information of a trade, that I have been involved in it for 15 yeards. But it looks like it is getting complicated.



My friend when you say "Then comes the fun part: the carrier will now go after the contractor to recover the monies that they have paid the customer! Remember--- it's an extension of credit and NOT insurance! "

What happens if the contractor is dead ? The Bonding companies think about all these senarios.



Beside the customer will obtain PERFORMANCE bond from the contractor. It means if for what ever reason the contractor does not finish the job the Bonding company now has to come and perform the job untill it is completed. Can you imagine what a hard job it is for a customer to come and finish an unfinished job . That is why they obtain PERFORMANCE BOND from the contractors.



i need to mention that I am talking about Commertial General Contractors here, as this is my expertise.



I really do not want to confuse anybody, I really wanted to give a hint, a tip to the agents.



May

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PostPosted: Fri Jan 04, 2008 11:37 am   Post subject:   

Quote:
I really do not want to confuse anybody, I really wanted to give a hint, a tip to the agents
I think everyone understood this May, where we were confused (and in disagreement) was the ascertion that a life policy be purchased with the bond company being the beneficiary.



I think we are all on the same page now...and thank ins teacher again for his contribution and clarity to this thread.....



Thank you too May for your post and hope to see more!


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PostPosted: Fri Jan 04, 2008 6:06 pm   Post subject:   

Thanks for the props, Lori. Same back at ya.



Lat comment on this thread from me, unless I feel the need to comment again. I take umbrage with the following post portion:



Quote:
Beside the customer will obtain PERFORMANCE bond from the contractor. It means if for what ever reason the contractor does not finish the job the Bonding company now has to come and perform the job untill it is completed. Can you imagine what a hard job it is for a customer to come and finish an unfinished job . That is why they obtain PERFORMANCE BOND from the contractors.





That gives the impression that the bonding company (the insurer) will actually make sure that your job is completed. NO NO NO NO NO! The bonding company will only provide compensation, UP TO IT'S LIMITS, and will NOT ensure that the job is completed! Just about every state has MINIMUM bonding coverage limits for contractors depending on what type of work is preformed (residential, commercial, square footage, etc.), and most contractors only purchase the minimum amount required in their state.



As an example, if the contractor leaves $50k unfinished work, and has bond limits of $25k, do you think the insurer will pay the entire $50k? Don't think so...



Consider the following quote from (I hope this is allowed, Lakemen) from Wikipedia:



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

For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building. If the contractor fails to construct the building according to the specifications laid out by the contract (most often due to the bankruptcy of the contractor), the client is guaranteed compensation for any monetary loss up to the amount of the performance bond.



Performance bonds are commonly used in the development of real property, where an owner or investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event (such as insolvency of the contractor).







Here is another quote I think worth mentioning and then blowing up:



Quote:
What happens if the contractor is dead ? The Bonding companies think about all these senarios.





Of course they think about it. All insurance companies think about it with many different policies issued.



Here's the answer: like ANY creditor, if you owe them money and you die, they will GO AFTER YOUR ESTATE and will be considered an UNSECURED CREDITOR...just like your visa card! They will take THIRD position as to the disposition of the assets behind (1) the government; (2) Secured creditors, and finally (3) unsecured creditors.



Phew...I guess experience in an area doesn't guarantee knowledge in that area. Sorry about the attitude, but before a post is submitted, the author should check to see if the info offered is actually ACCURATE.



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PostPosted: Mon Jan 21, 2008 3:18 pm   Post subject:   

Bonding companies do consider the "what if they die..." scenarios, but not for a small bond like you are discussing (more likely for over $500K).



For smaller bonds (and large bonds alike) they rely on the indemnity agreement that must be signed prior to issuance of the bond. The bond states that the principal holds the carrier harmless in the event of a loss. Keep in mind this is personal, spousal, and coroprate indemnification.



I'm a bond producer, but I am sure you can find multiple bond underwriters that will back up my statement at the Surety Forums

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PostPosted: Mon Jan 21, 2008 4:10 pm   Post subject:   

My hubby was never bonded but none the less he still worked and was hired to do a lot of jobs.

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PostPosted: Mon Jan 21, 2008 7:17 pm   Post subject:   

hummingbird, not all municipalities require a bond. If no one is requiring it of him then he can not obtain a bond, as they are three party guarantees, not insurance.



This means that if there is no bond to be filed then he can continue as has been without consequence.

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PostPosted: Mon Jan 21, 2008 9:31 pm   Post subject:   

Thanks for the info!

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