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4
Who Is on Your Side?
For example, if an electrician’s company folds during the project, the insurance company can effectively hire another electrician to finish the job. Or, if a contractor fails to pay their employees/suppliers/subcontractors, the insurer can once again step in to make sure the appropriate people are compensated.
No matter the situation, the end result is the same. The insurance company will come looking for reimbursement.
While they may seem like your ally in making sure things get done and the project continues as expected, they are not your friend. They are interested in minimizing their exposure while maximizing what you pay back. Additionally, they have NO obligation to defend you, unlike with a traditional insurance policy. If it comes down to it, the surety will leave you out to dry. Never misconstrue the insurance policy or product you are buying. Always read the fine print and always walk away with a firm understanding of how you are covered and what to expect from that coverage as you begin work on a project.
3
Distinct Differences
While this description sounds similar to a normal insurance policy, the real differences are in the fine print of the contact. Virtually anyone can buy normal insurance for any number of purposes. In order to buy a surety bond, you must take an extra step. In order for a surety bond to become activated, the construction company must agree to pay back the insurance company for any money the insurer spends on the project. That is to say, if the surety is called to hire a new contractor or they are called in order to resolve a compensation issue, someone must pay that money back.
You don’t want to get caught by surprise in the middle of a project.
If you have questions about insurance policies, such as CGL policies or surety bonds, email me at jwyatt@harrisonlawgroup.com or call me at ( 410) 842-0145 . I’m on your side to help you make informed decisions and understand how you are protected.
Any number of issues can arise that trigger the surety bond:
• A contractor gets fired, quits, or goes out of business.
• A contractor fails to complete a job.
-Jeremy Wyatt
• A contractor refuses to pay people owed.
jwyatt@harrisonlawgroup.com
www.HarrisonLawGroup.com
(410) 832-0000
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