Contract Surety Insurance – Nova Scotia
As a business owner, you may need to purchase a surety bond when entering into a contract. Suppose the unexpected happens and you’re unable to fulfill your contractual obligation. In that case, a surety bond will protect the third party from the financial impact of the inability to complete the terms of the contract. With the many unknowns of owning a business, don’t let entering a contract be one of them. As a business owner, we know that you wear many hats, so let us look after your insurance needs so you can focus on what’s most important.
As your local insurance experts, we know that each business in Nova Scotia is unique in its own way. From long-established small contracting businesses in Halifax to construction companies that provide work from Cape Breton Island over to Bridgewater and all other businesses in between, we’ve got you covered. With all it has to offer, it’s not hard to understand why so many people decide to set up shop in Nova Scotia.
We understand it’s vital to protect what’s most important to you and your business. Our expert insurance advisors are here to ensure you’re protected and provide peace of mind so you can focus on nurturing your business for the future.
Why Choose Westland?
We know that your business insurance needs to match your goals, your business and your budget. Our expert business insurance advisors get to know you and your business, so that they can tailor a policy to your exact needs. We’ll work with you to build a risk management solution, ensuring coverages line up with your business needs.
Insurance can be complex sometimes. Let our expert insurance advisors do the heavy lifting! We’ll help you find a policy that you feel is the best fit and provides peace of mind. To learn more about the benefits of being a Westland client, Click here.
Contract Surety Bonding Insurance Explained
A contract surety bond is a unique relationship between a contractor, project owner, and surety company, facilitated by your insurance broker. Regardless of the scope of the construction project, contract bonds ensure the obligations made as part of a construction contract will be met.
No matter the industry, our business insurance advisors can quickly determine the risks your business may face and the potential financial losses that can leave your business in a vulnerable position.
Typically, general contractors, construction companies, and government subcontractors use this type of bond when completing commercial and government real estate projects.
A contract surety bond will relieve the project owner of the risk of a financial loss if there is a failure on the contractor’s part to complete their obligations. This can be the case for many reasons, but the more common reasons are:
- Managerial Issues
- Inadequate job costing or project management systems
- Changes to key personnel that impact the progress of the project
- Changes to business strategy that impact work in progress
- Too much growth too quickly, putting pressure on financial and human resources
- The project was out of scope for the contractor
- Labour & Materials Issues
- Shortage of labour to complete the project
- Material changes to the cost of input products due to scarcity, tariffs, etc.
- Unrecoverable cost escalations
- Uncontrollable Factors
- Severe weather causing delays
- Unexpected economic failures
- Changes in the job site conditions
- Death, illness or departure of key employees
- Labour shortages or difficulties
- Difficult contract terms or working environment
Any one of these factors can cause a delay in meeting contractual obligations within the agreed-upon scope. A contract surety bond offers financial protection for third parties for any of these types of problems that can come up.
There are two main types of surety bonds. The type of bond you require depends on your current situation, but in many cases, contractors may need all three of the following:
- Bid Bond
A bid bond provides your guarantee that, when bidding on a project, the bid has been submitted in good faith. It is the full intention that if your company is selected as the successful bidder, you will assure the pricing you have provided and will provide necessary performance and payment bonds when necessary.
- Performance Bond
A performance bond is precisely that – a guarantee that your company will perform the duties and responsibilities as outlined in the contract. If you cannot create work as described or meet timelines, your inability to perform will cost your customer money in financing, perhaps late penalties, lost revenue, and more. A performance bond gives your customer the protection they need to avoid the financial loss because of your inability to fulfill the contract
Bond issuance is based on many factors, but in short, a good relationship between you, the contractor, the bonding company, and your insurance broker is vital to continuing with large-scale projects. Most companies will need to “prequalify” for bonding so that when the perfect job comes available, they can enter into a bid quickly with confidence in their ability to perform the work. Going through prequalification for bonding can ensure you have a complete handle on the KPI’s that drive your business forward, such as:
- Capacity to Perform Tasks
- Financial Strengths
- Company History
- Organizational Structure
- Continuation Plans
- Current Work In Progress
- Good Character
- Experience in Matching Contract Obligations
- Financial Stability
- Good Credit History
- Solid Banking Relationship
- Line of Credit
- Has Equipment & Resources to Carry Out the Contract
How Much Do Contract Surety Bonds Cost in Nova Scotia?
Just as businesses differ across Nova Scotia, so do the risks and exposures which impact the cost. The following factors will impact the cost of your contract surety and bond coverage:
- Duration of Project
- Type of Work
- Government vs. Company
- Percentage of Contract Amount
- Annual Fees
Review Your Insurance and Get a Quote with Westland
Ready to discuss your insurance needs? Our expert advisors are here to review your current insurance policies, discuss your unique risks and operations, and find the perfect insurance policy for your business. Whether it’s over email, the phone or in person we are ready to help! To get started on a quote now and see price estimates for your business coverage, click the button below. Our advisors will contact you right away and help navigate your risk management needs. Of course, we are always available to talk over the phone or in person. Check out our locations page to connect with an office closest to you!
10 Nova Scotia Business Facts
- With all the surrounding beauty, the tourism industry is a large sector in Nova Scotia. In fact, more than 1.2 million visitors were welcomed in 2019.
- When you think of the East Coast, what comes to mind? Lobster fishing of course! The commercial fishing industry is a cornerstone of the province with exports of lobster totalling $570 million in 2014.
- With 75% of Nova Scotia covered with Acadian forest, the forestry industry is an economic anchor in the province. It attributed to over $2.1 billion in economic impact as well as 11,500 jobs.
- Downtown Halifax is the heart of Atlantic Canada’s big city. It features more than 400 retailers, restaurants, pubs and services.
- A popular attraction for visitors and residents alike is the Maritime Museum of the Atlantic. Located in downtown Halifax, it’s the oldest maritime museum in Canada and features over 30,000 artifacts.
- Nova Scotia’s agriculture sector is heavily focused on dairy and poultry. Dairy production exceeds 206 million litres of milk as well as over 17 million dozen eggs annually.
- Halifax nurtures a large IT, gaming and digital media sector. Video game production has a home in Nova Scotia for companies such as Ubisoft Halifax, RedMeat Games and Silverback Games!
- With its location along the east coast, ocean technology is prominent in Nova Scotia. Technology includes acoustics, instrumentation and sensors in addition to ocean observation and defence and security.
- Nova Scotia is also known as the global gateway to the world, leading to a sophisticated transportation and logistics industry. By utilizing sea, rail, air and road Halifax is known as the transload hub when it comes to imports destined for central Canada and the US.
- With all of the fresh seafood, the restaurant industry in Nova Scotia features some of the best dishes. There are over 1,700 businesses employing over 30,000 employees across the province. Although not seafood, the official food of Halifax is the donair.