A commercial bond is a written warranty that provides a guarantee for the faithful performance and/or delivery of a contract. It is a way to ensure that contractual obligations are fulfilled and carried out. Surety bond companies generally offer a wide array of commercial bonds.
At EGM Insurance, we specialize in 4 main types of commercial bonds:
- commercial bid bonds
- performance bonds
- labour and material bonds
- and in Quebec, Quebec license bonds
Commercial Bid Bonds
Commercial bid bonds are those that are obtained by contractors when they bid on a contract to ensure that the contract will then be executed based on the agreed upon terms. The bond is there to provide a guarantee that any damages arising from fraud or illegal activities will be reimbursed to the party that suffered damages because of them. This is also a useful bond because it allows bond owners to vet potential contractors. Before a contractor is sold a bond, they are first subject to credit checks and must go through the approval process to ensure that they are able to pay in the event of fraud, damages or illegal activity.
Performance bonds are an insurance bond most often found in the construction industry. It, much like the commercial bid bond, also protects customers from fraud and illegal activities, but it also protects from failure to complete a job. If any of the aforementioned things happen, the agency that sold the bond will then reimburse the party that suffered losses, including suppliers and any other stakeholders in the transaction who may have been hurt financially.
Labour and Material Bond
This is a very common bond used on commercial construction projects where a large number of different subcontractors are used, and it essentially is a guarantee that subcontractors and suppliers are going to get paid for their work and materials. The company that sells the bond is agreeing to pay those subcontractors and suppliers in the event that the main contractor cannot, or does not. These bonds are peace of mind to subcontractors, who can work freely, knowing that they are going to get money that is owed to them, and it also makes the working relationship between the contractor and the subcontractor more comfortable.
Quebec License Bond
The RBQ license bond, or the Régie du bâtiment du Québec’s licence bond, is mandatory for all contractors in the province of Quebec and is meant to ensure that any customer who suffers damage because of a contract either being carried out or not carried out is reimbursed. The required bond varies between $20 000 and $40 000. Your EGM Insurance broker will ensure that securing the required bond will not be detrimental to your cash flow.
At EGM Insurance, we have been providing our customers with the above commercial insurance bonds for years and have built relationships with surety bond companies all over Ontario and Quebec. If you are a contractor planning on doing business in Quebec, an RBQ license bond is necessary. Contact EGM today and let us help you find the best insurance bond available to you.Back