If you live in the City of El Paso, Texas and conduct construction projects within the city as part of a business, you are probably familiar with El Paso Municipal Code 18.02! This code requires that all those who are engaged in construction projects get a Blanket Building and Construction Bond for $25,000 before the municipality of El Paso will give a contractor a permit for construction!
This applies to just about all types of building construction in El Paso—if you are involved in new commercial/residential construction projects, any types of renovations, or additions in El Paso, you will definitely need a Texas City of El Paso Blanket Building and Construction Bond! A Blanket Building and Construction Bond is a type of surety bond that protects clients of builders and renovators, and works much like a surety bond!
If you’re involved in other projects such as lighting, signage, and fencing, you may require a $10,000 bond as well—so if you are unsure with what you will need and how to apply, you should speak with your insurance agent to assist you with the process and how it all works!
Did you know that Contractor Bonds, and Surety Bonds in general, are usually described as a line of credit, rather than insurance? The reason why is that if you have a claim against your Contractor Bond you will have to pay the surety company back, in full, for the amount paid out!
completely dumbfounded, and instead of being mad and worried about her finances she only was just disappointed in her employee more than anything since she knew that she had coverage to protect against this exact scenario! She was able to make a claim, and later said she was glad she was able to have a quick and easy resolution to such a horrible problem!
If you are a contractor and need to get a Payment and Performance Bond it is extremely important you speak with your insurance agent! With a lot of projects that are done for the state or federal governments—you will find that these types of surety bonds are required to be able to undertake the project!
needed to have both Payment and Performance Bond insurance just to build a single (But pretty expensive) retaining wall for a new school! He was telling me if the project is over a certain amount of money that you have to have these types of coverages, he mentioned that the “Miller Act” is the reason for this and places the threshold at $100,000 for federal projects. I also found out that in Texas the “Little Miller Act” applies to any state project—no matter the cost!
I remember a story of a plumber losing their bond to a client that had their water heater pipes worked on by him. The plumber did not put a simple o-ring on a pipe he was replacing and ended up causing massive water damage to the inner walls of the house! The bond was paid out, the plumber was extremely distraught, and became even more so when he received a call from the bond company about how he was going to pay them back! If he had a General Liability plan with a Plumber’s Liability policy attached, he would have only paid his deductible and the client probably would not have made a claim on his bond!
consider that if a claim is made against a bond and paid out to the claimant, the bond company will pay the person making the claim and then will turn around and ask you to pay them right back! This is different than General Liability since Surety Bonds do not protect your company and work against accidents or property damage like insurance coverage would, bonds are only are paid out when a legitimate claim is made against them!
If the principal is paid out, then you will be on the hook for the amount and the bonding company will then demand the money from you! It is always extremely important to treat surety bonds with respect and to always carry out the commitments that are promised by them!
noodle and seeing that it’s not as intimidating as it seems! These 3 mistakes are what I have found to be the most common:
It happens, there are those rare few stories out there about how obligees have been victimized by an unsavory (Usually unregistered) surety. But to make sure that you are always getting what you agreed to, always do business through reputable agents, make sure that they are registered with the state by talking with your state insurance commissioner or by verifying membership through one of the various national surety bond associations just to make sure!
Otherwise you will have to do the process again and possibly face judgment! Just like those nightmarish days in college, deadlines do matter!
ssibly is a title-jumper, who knows!), and you thought— what the heck, I’ll see what I’ll have to do, I really want that car!
The difference between this and an insurance plan is the company that bought the bond cannot make a claim against it! Surety bonds are usually made to protect the customer as well as the bonded company in higher risk business scenarios and in situations, but if you are the bonded party and do lose your bond, the surety company will be expected to be reimbursed in full! The surety buyer’s protection is very short lived!
Better business Bureau ®