Understanding The Requirements For Obtaining Canadian Surety Bonds
As a Canadian construction contractor, there will come a time when you’re required to obtain a surety bond or two. In fact, you will need to obtain a bond each and every time you decide to begin a new project. Unfortunately, getting a surety bond isn’t the easiest process in the world, but thankfully it isn’t overly complicated either. Once you’ve completed the process several times, it will begin to feel natural. Nonetheless, you will need to meet a few requirements, before you will be eligible to obtain a surety bond. For your consideration, these requirements will be explored in greater detail below.
Understanding The Bond You Need
Bonds are required for many construction projects to ensure that a contractor follows industry regulations. Since the law requires these bonds before work can begin on any major project, it is imperative that you understand what they are and how they work. Some of these bonds can be tricky and not everyone completely understands them. Even experienced contractors that are required to purchase these bonds know little about them until they are informed that they are required to obtain the bond.
The first thing that you need to know is that the laws and requirements can be different is certain countries. However, in Canada all contractors are required to obtain a contractor license bond before they can begin work on any project. If any contractor tries to begin work without this license it can result in major fines and repercussions, which could eventually lead to legal action.
Understanding The Project
Now, you should realize that each project will be unique. The specific requirements will tend to change from one project to the next. Before trying to obtain the bonds, you will need to determine precisely what bonds are required for the current project at hand. The bid bond is almost always a necessity. This bond will need to be obtained, before you’re even selected for the project. After this, you will need to obtain a performance bond, payment bond, any other types of bonds, at the client’s discretion.
In some cases, the client may require you to also obtain a maintenance bond. This bond will provide the client with additional protection for a longer duration. Make sure you consult with the client directly, so you can determine precisely what will be required should you be selected for the project. If you’re trying to obtain a bid bond, you will need to know the exact amount of your bid and the date that the bid will be placed.
Most surety companies base their decision on whether or not to approve a surety application solely on the applicant’s financial analysis. Some underwriters will require the applicant to provide fiscal year-end statements for the past three or four years. This is something that new contractors will not have access to, which is why you should apply for a bond with our company. We only request fiscal year-end statements for the past year. This requirement is applied to new and veteran contractors.
The Canadian government requires business owners that hire a specific number of employees to obtain workers compensation insurance. This insurance will not only protect your business, but it will also protect you employees, in the event of an accident. The accident must have occurred on a job site or on the business premises, in order for the employee to be covered under the policy.
Workers Compensation will pay your hospital bills, burial costs and compensate for lost wages. When it comes down to it, some provinces will make this a requirement. Nonetheless, it is truly in the contractor’s best interest to make sure their company and their employees are protected with a comprehensive insurance policy.
While it may not be a requirement for the surety company, it is essential to remember that all Canadian provinces require businesses to have insurance. The insurance will help to protect the client should anything go wrong during the course of the project. To read about the difference between surety and insurance, click here. The precise insurance requirements tend to differ from province to province. Therefore, you will need to figure out exactly where you intend to ply your trade and then find out these specifics for those select locations. This will help to ensure you can begin working, without any delay.
A Business Plan
It is important to remember that the requirements for a surety bond will differ from one issuer to the next. In some situations, it may be essential to construct and submit a business plan. The surety provider will want to know for sure that your company will be a success in the future. They’ll utilize your company’s history and business plan to ensure that you will indeed be able to excel. Therefore, you should create a thorough business plan and have it ready, before applying for the bonds that are needed.