Category: Construction Bonding Specialists - page 3

Since January 23, 2023, the Michigan Uniform Vehicle Dealer Surety Bonds (also known as Michigan auto dealer bonds or Michigan motor vehicle dealer bonds) has increased from $10,000 to $25,000. 

Mandated by Michigan Compiled Laws 257.248, the surety bond requirement has yet to be distributed to all motor vehicle dealers. Any individuals or business entities who sell or deal in five or more motor vehicles within a 12-month period are subject to the code. This ensures the public will receive compensation for any damages if the auto dealer is not in compliance with the dealer licensing law.

Regulated by the Michigan Secretary of State, the Michigan legislature enacted the license to guarantee dealers engage in ethical business practices such as remitting payment for taxes and fees. Specific licenses are required for auto dealers by the State of Michigan, depending on the nature of the business. Dealers will need to acquire a license for each type of business they are active in. 

The different types of Michigan Dealer Licenses are:

• Class A: New Vehicle Dealer
• Class B: Used Vehicle Dealer
• Class C: Used Vehicle Parts Dealer*
• Class D: Broker
• Class E: Distressed Vehicle Transporter*
• Class F: Vehicle Scrap Metal Processor*
• Class G: Vehicle Salvage Pool*
• Class H: Foreign Salvage Vehicle Dealer
• Class R: Automotive Recycler*
• Class W: Wholesaler*

*It is important to note that classes C, E, F, G, R, and W are exempt from the surety bond requirement. 

The Michigan Department of State requires that existing bonds be increased with a rider amendment document provided at the next renewal. The deadline for filing paperwork to increase the Michigan auto dealer amount is December 31, 2023. Any dealers who do not file the required documents before the deadline will potentially have their licenses canceled.

All existing bonds are subject to the increase at the next renewal term, so dealers who have active bonds already on file with the state of Michigan can expect the bond amount to increase by inflated premiums on their next renewal term. Any newly paid renewal invoices should be filed with the state of Michigan.

_________________________

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Digital bonding in the construction industry is much more common these days, primarily due to the introduction of digitization into the surety industry. Especially since the pandemic, when many everyday activities suddenly were launched into the digital realm, digitization of sureties for the construction industry has only gained momentum. 

Paperless, fully digital bonding platforms are up-and-coming. McKinsey and Company recently reported the world will need to spend roughly $57 trillion on infrastructure by 2023 to keep up with GDP expansion. To meet that immense demand, the construction industry will be forced to embrace more digital options to support organization, efficiency, and finalization. 

Surety digitization in the construction industry has a bright future since time and cost savings can be recuperated. Managing a range of developments can be challenging without a specific digital solution to procure an effective bidding and bonding process. Two essential areas that can help in this realm include advanced analytics for intelligent asset management and digital collaboration, such as moving to paperless projects. 

Construction firms can immediately benefit from the simplicity and overall capacity of employing technology in surety and underwriting management systems by implementing cloud-based software. Those already immersed in the digitization transition have found their business growing more rapidly. With the bidding and approval of contracts fully automated, firms can minimize time-consuming offline work, instead focusing on workflow efficiency. 

Some benefits of digitization include better managing workflow, automating underwriting, managing portfolios, improving document functions, forecasting sales productivity, and connecting with brokers in real-time.

The construction and surety industries have adapted in previous times of uncertainty, such as the global pandemic, supply chain obstruction, and overwhelming worker shortages. Due to the industry’s apparent resiliency, the future will continue transforming as needs arise. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

The Small Business Administration (SBA) is advocating for more small businesses to partner with federal contractors, particularly with the latest advancement to update critical infrastructure throughout the U.S. With the passing of the $1 trillion infrastructure law, the Biden administration made available about $60 billion to the states earlier this month. These funds are earmarked for rebuilding critical infrastructure within all 50 states, including Washington D.C., and Puerto Rico.

The SBA has teamed up with the U.S. Dept. of Transportation to offer additional opportunities and access to capital while removing common obstacles small businesses often face. A new avenue was created for small and disadvantaged businesses to help connect companies with contracting opportunities and be able to access some of these funds. This includes actions such as direct introductions and educating small business owners on how to be competitive in securing contracts.

The much-needed critical infrastructure work ranges from rebuilding roads and bridges to buildings and public transit. SBA administrator Isabel Guzman reports, “That technical assistance is going to give them the how-to in terms of going after, successfully bidding on, and winning contracts in the federal space.”  

In 2021, the U.S. infrastructure was given a C- by the American Society of Civil Engineers (ASCE), which is up from a D+ in 2017. Seventeen categories were assessed in 2021, with grades ranging from a B for railroads to a D- for transit.

Small businesses have a difficult time obtaining federal contracts compared to larger entities, in part due to contract bundling. Bundling occurs when multiple tasks are entered into contracts that balloon, causing the contracts to become so large that small and medium-sized businesses can’t take them on.

Another barrier is the lack of history. If a business cannot prove its historical performance, then they fail to compete, making it much more difficult to secure future jobs. This is what the SBA hopes to assist with; connecting businesses with subcontracting opportunities that, in turn, help build up their portfolio and give them a better edge to go after prime contracts.

“It comes down to expanding the number of opportunities and ensuring that small businesses are entering the contracting space, getting certified, and able to know the how-to’s of who to connect to, how to present yourself, and how to get money,” Guzman says.

The SBA is also assisting small businesses within the transportation sector to get bonds, which guarantee agreements. Most federal contracts require businesses to be bonded. Surety bonds are a type of insurance with a three-party contract in which the surety guarantees a contract’s completion, i.e., with the federal government. If a contractor is unable to complete a project, the responsibility falls on the surety company to find a replacement contractor.

It’s estimated that about sixty-five thousand contracts were received by small businesses in 2021, down by almost 40% over the past decade. While the SBA and the U.S. Dept. of Transportation have not enumerated a goal, this partnership aligns with the current administration’s objective to advance the equity in government procurement. The federal administration has set an 11% federal contracting goal for small, disadvantaged businesses, with an increase to 15% by 2025.

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

What is a surety bond?

A surety bond is a signed agreement that guarantees compliance, payment, or job performance. Sureties are a type of insurance with a three-party contract in which one party (the surety) guarantees the performance of a second party (the principal) to a third party (the obligee). Surety bonds written for construction projects are called ‘contract surety bonds;’ otherwise, they’re known as commercial surety bonds.

Who is the surety?

A surety is an insurance company or surety company licensed by a state department of insurance that guarantees the performance of a principal. If the principal fails to act as promised, then the surety is liable for losses sustained.  

Who is the principal?

The principal is the person or entity who purchased the bond. In construction, the bond is given to the contractor or subcontractor who undertakes the obligation to perform the job as promised. The surety guarantees the principal’s responsibility.

Who is the obligee?

The obligee is the individual or entity with whom the principal is contracted. In construction, the obligee is the project owner or the primary contractor. Often the obligee is a local, state, or federal government organization.

What documents will I need to get bonded?

• Completion of a Contractors Questionnaire
• Fiscal Year End Business Financial Statement for the Contractor and all subsidiaries and affiliates for the last two years
• Current personal financial statement for all owner(s)
• Current work on hand schedule
• Current bank reference letter
• Resume of all key employees
• The current insurance certificate naming Construction Bonding Specialists, LLC as a certificate holder

For Bid, Performance, or Payment Bonds – the following items are also required:

• Contract Bond Request form: Contract Surety
• A copy of the underlying contract and bond forms for our review

What factors does a surety consider in the underwriting and prequalification process?

Obtaining a construction bond is more like getting bank credit than purchasing insurance. Surety underwriters perform a thorough and detailed process to review and evaluate the financial documents submitted. They also consider factors such as the risk under the specific contract for which the contractor seeks a bond, the contractor’s entire work portfolio, past performance, experience, operational efficiency, managerial skills, business plan, and reputation for integrity. Different sureties will weigh varying factors during the underwriting process, but almost all will consider the following factors:

• Financial capacity
• Net worth
• Cash flow
• Assets
• Credit score
• Work in progress
• Work history, including expertise and experience
• The banking relationship
• The nature of project to be bonded
• The character of the contractor

BONDS ARE ALL WE DO!

Apply Now!

For more information about our bonds visit our website or call 248-349-6227

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

Experienced contractors generally make a conscious effort to avoid claims situations, while being proactive about understanding the process. Utilizing the perfect surety gives those contractors the knowledge and power they need for their claims team. For any contractor to take on bonded jobs, basic comprehension is essential.  

The three main types of construction bonds are: bid bonds, payment bonds, and performance bonds.

Bid Bonds
These bonds stem from situations when the principal is the successful bidder but cannot enter into the contract or provide final bonds. In bid bonds, the principal and surety are required to pay a specific sum to the obligee. The bond form caps liability at a particular amount (the difference between the principal’s bid and the next highest bidder’s bid) instead of exceeding the penal sum of the bid bond. The responsibility of this task is between the principal and surety. 

Payment Bonds
When the principal fails to pay subcontractors, laborers, and/or suppliers, payment bonds give the surety the right to assert all of the principal and surety’s defenses, which sometimes include limitations on notice and time. Only proper “claimants” can benefit from these bonds, so the principal and surety need to confirm the claimant can pursue the claim. 

Performance Bonds
A performance bond claim arises when the obligee defaults or terminates the principal for non-fulfillment regarding their contractual obligations. Handling a performance bond claim has various levels of importance, including cooperation, agreements, and challenges. One of the most trying decisions is to admit or deny liability. After analyzing contract documents, bond forms, factual issues, and possible defenses, the surety has to eventually decide whether to perform. 

Surety partners will typically work in conjunction with contractors to avoid claims or mitigate the damages. Selecting the ideal surety with a good track record of minimizing legal fees while resolving claims is paramount for any contractor. 

If you are seeking a construction bond, contact the specialists at Construction Bonding today. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

While public (federal, state, or local agencies) projects are required to provide performance and payment bonds, private construction generally does not require bonds. For privately-owned construction jobs, it is up to the owner to secure a bond. 

While most contractors will work with a surety to provide the bond, some contractors will make it mandatory for the owner to pay for the bond. Depending on the contractor, size, type, and duration of the project, bonds can range in price between one-half to three percent of the contract.

Some of the reasons why private owners elect to secure bonds include: 

• Lenders: Owners may be required to provide bonds if a lender is financing the job. 
• Contractors: Sureties will thoroughly screen contractors for proficient operations, management, experience, and financial stability. 
• Guarantees: Bonded projects are more likely to be completed.
• Support: If trouble emerges, the surety will intervene and offer support to avoid default. 

Private owners choose to forgo bonds because: 

• Price: Bonds are expensive, and it can be challenging to justify higher expenses. 
• Vetting: Financial and other records are generally difficult to obtain, but some contractors provide access to sureties.
• Contracts: Countless provisions require clear communication between the surety and contractor.

Practically speaking, securing bonds for privately-owned construction jobs depends on the experience of the contractor, size, and nature of the project. Bonding might be justified if the project is big but the contractor is smaller. If the contractor is unfamiliar with the structure or components, a bond might be a good idea. Lastly, if a private construction job does require a bond, it is imperative for the owner to review the form with an attorney to ensure everyone will comply with the stipulations. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/ 

Specific sections of roadway are being showcased by the Michigan Department of Transportation by way of signs that say, “Bond Financing at Work,” which alludes to Governor Gretchen Whitmer’s 2020 road bonding plan. 

MDOT spokesman Jeff Cranson said about 15 green signs ($750 each) have been installed throughout the state with plans to install more. One sign, located in a construction area on Interstate 496 in Lansing, is meant to assure “that the work is being done,” according to Cranson. 

“Installing these signs is consistent with MDOT’s objective to be transparent and provide the public with as much information as possible about road projects,” Cranson said.

House Republicans who have opposed Whitmer’s bonding plan added a stipulation to the transportation budget requiring that the signs mention the monetary amount paid by the state in interest and borrowing costs to repay the bonds. 

Currently, the 2022 budget requires construction and borrowing costs to be listed on the signs. MDOT is not complying with the law, so the 2023 budget approved by the House includes provisions for non-compliance. 

Cranson says the addition of words or signs as outlined by the House budget would increase the cost of each sign. 

In 2020, Whitmer suffered from a failed bid to bump up the state’s gas tax by 45 cents a gallon to finance road renovations. In response, she launched her “Rebuilding Michigan Plan,” announcing it during her 2020 State of the State address. The next day, the Michigan State Transportation Commission authorized the department’s use of bonding.

Rough estimates by economists showed that the $3.5 billion program would total approximately $5.2 billion if the state remits annual debt bond service payments of $206.6 million for 25 years. About $529 million of the $1.6 billion issued thus far has already been spent or is spoken for, with an additional $1.9 billion in bonds to be sold in the future. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 to learn more.

Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/

Contract workers are required to attain a license or permit bond from a surety bonding company, such as ourselves. They are also required to obtain worker’s compensation and liability coverage for their crew. The difference between bonding and insurance can be a bit confusing and unclear. Read on to learn how to decipher between the two.

What is Workers Compensation and Liability Insurance?

Worker’s Compensation is a type of insurance policy that guarantees the injured employee to receive medical care, disability/rehabilitation, and have expenses related to the injury covered. Typically, while having worker’s compensation coverage, employees have their right to sue for negligence waived.

Some employees may opt-out of their employer’s worker’s compensation policy. Certain employees may have a pre-existing condition or injury not covered by worker’s compensation. In either of these cases, it’s important to maintain liability coverage, as the employee may file suit against the employer. Liability insurance protects employers from instances listed below.

Workers’ Compensation & Liability Insurance Covers:

• workplace injuries
• injuries occurring during work-related travel
• injuries due to workplace violence
• natural disasters
• illnesses
• fatalities

What is a Contractor License Bond?

Each state holds its own requirements for permitted construction work, but all require at least a permit bond and/or a license bond. Contractor license and permit bonds are a type of surety comparable to a line of credit and allow the contractor to perform work within that jurisdiction. The bond is an agreement between the contractor, the state licensing agency, and the surety company stating that the principal contractor will provide services in accordance with state and federal law (adhere to building codes, etc.)

If the contractor fails to fulfill the terms, a claim can be made against the bond, and the surety will investigate. If the surety concludes that the claim is legitimate, it will usually pay compensation to the claimant, up to the bond’s total value. The contractor remains liable for their obligations and must repay the surety, even though the surety company initially covered the claim. Therefore, these types of bonds are associated to a line of credit rather than insurance.

Summary of Contractor License Bonds, Workers Compensation, and Liability Insurance

• A contractor license bond protects the contractor’s clients and the public. It’s a line of credit that, if used, requires the contractor to repay any compensation the surety had to extend out to the claimant(s).
• Worker’s compensation is an insurance policy that covers employees in cases of work-related injuries.
• Employer liability insurance protects/covers employers from lawsuits that may arise in cases of work-related injuries.

Understanding the requirements for permitted construction work can be complicated. At Construction Bonding, bonds are all we do. Call us today for professional, straightforward, and sound surety advice.

____________________________________________

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

The construction season is fast approaching, so those bidding on new jobs will need to make sure they have the appropriate contract bonds lined up to qualify for review. The process can be confusing, and unfortunately, some requests for proposal (RFP) contain vague language regarding the bond specifics. Those vying for government construction work and maintenance, often privatized jobs, will need a contract bond (or surety bond.)

Surety bonds are contracts between three parties: the principal, surety, and oblige. They provide a financial guarantee that one party will fulfill their legal, contractual obligations to another. A surety bond is more like a line of credit than insurance. Usually, construction contracts are completed to the satisfaction of all, where work expectations are met, and wages are paid out – the surety doesn’t need to get involved. If a disagreement occurs and the principal and the client (generally the oblige) can’t settle on a compromise, they can file a claim with the surety for financial compensation. The surety will investigate the claim, and if found legitimate, the surety will pay the claim in an amount up to the bond penalty.

A contract bond refers to several surety bond types. Below are the three most common contract bonds:

Bid Bonds: A bid bond is a prequalification indicating that the contractor is bondable for the performance and payment bond should they be read low or chosen by an Owner/GC/CM to enter into the contract and provide a Performance and Payment Bond.

Performance Bonds: Performance Bonds offer assurance that the bonded contractor will perform according to all contract documents.

Payment Bonds: Payment bonds assure that the bonded contractor pays for all materials and labor associated with the documents related to the contract.

Need help obtaining a contract bond? CBS will help you determine the RFP bond requirements in order to submit a bid and consequently win the contract. Contact us today for assistance.

_________________________________________

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.