Why Agents Are Crucial To Hurricane Ian Recovery Efforts
October 13, 2022
Hurricane Ian hit Florida’s Gulf Coast on Wednesday, September 26, and is shaping up to be the state’s deadliest storm since 1935. In addition to the lives lost, the storm temporarily knocked out power for over 2 million Floridians and has caused billions of dollars worth of property damage.
Thankfully, the recovery process is well underway. However, Ian serves as a reminder of the important role insurance agents play in the aftermath of a hurricane, especially when supplying the contract bonds needed to begin rebuilding damaged infrastructure.
In this article, we explain what surety bonds are required in the wake of a hurricane or other natural disaster and provide agents with the information needed to efficiently obtain these bonds for their customers.
Bid, Performance, and Payment, Bonds
Contractors are often required to purchase a bid bond when placing a bid on a construction project. Bid bonds ensure that, once the contractor is awarded the contract, they will sign it and meet all of the requirements outlined in the bid specifications, such as obtaining performance and payment bonds.
Performance and payment bonds are typically required in conjunction with one another. The former ensures that contractors complete the work as specified within the contract, while the latter ensures all laborers and material suppliers are paid.
The Miller Act requires performance and payment bonds on all federally funded projects costing $100,000 or more. Additionally, most states and local municipalities have enacted “Little Miller Acts” imposing similar requirements. Many privately funded commercial construction projects require performance and payment bonds as well.
In nearly all cases, contractors bidding on projects to rebuild government and commercial infrastructure following a hurricane or other natural disaster will need to obtain bid, performance, and payment bonds.
Agents can learn more about bid, performance, and payment bonds here.
Residential Performance Bonds
A residential performance bond is a type of surety bond that contractors may need to purchase before beginning repairs on a residential property in the wake of a natural disaster, provided that the homeowner’s insurance covers the repairs. The bond protects the homeowner from losses if the contractor does not do a good job or abandons the project altogether.
Residential performance bonds function similarly to those required for commercial and government-funded projects. However, surety companies are often reluctant to issue these bonds as, unlike the owners of government and commercial projects, residential project owners are usually unfamiliar with the language and procedures of construction contracts. Contact us for help obtaining a residential performance bond for your customer.
Agents can learn more about residential performance bonds here.
The Bottom Line
Hurricanes and other natural disasters can be devastating to those impacted. In addition to the loss of life and property, critical infrastructure is oftentimes severely damaged, leaving people without necessities such as gas and electricity. By efficiently providing the contract bonds needed to begin reconstruction projects, insurance agents are able to eliminate a potentially frustrating hurdle facing contractors working to repair the damages caused to affected areas.
How Can an Insurance Agent Obtain a Contract Surety Bond?
BondExchange makes obtaining a contract surety bond easy. Simply log in to your account and use our keyword search to find the “contract” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
