JW Surety Bonds

Tag Archives: Illinois

The benefits of performance and payment bonds: the Illiana Expressway case

If you are just now making your way in the public works bidding arena as a construction contractor, there are a few terms and requirements that you will need to get acquainted with. Surety bonds are an important one, as several different kinds are often required in such projects and, more specifically, performance and payment bonds. They are not only a legal obligation for public projects – their importance to the contractor and the general public can be crucial in the completion of projects of high public interest.

 

What are performance and payment bonds?

Although there might be many terms to learn and regulations to comply with in a bidding and public project execution process, the concept of bonds is actually quite easy to grasp. A performance bond is a guarantee that contractors will complete the project according to the contract’s clauses.The bond provides a protection against the contractor’s default by guaranteeing protection via a Licensed Insurance Company. Thus, if the contractor is unable to complete the project, the Insurance carrier backing the bond either writes a check for the incomplete portion of the project or more commonly the insurance carrier hires a contractor at their own expense to complete the job. Bidding on public works projects often involves as a requirement providing a bid bond at the first stage, which is followed by performance and payment bonds after the selection of the contractor.

What are performance and payment bonds?
What are performance and payment bonds? [Video]
A payment bond is the natural continuation of a performance bond. It guarantees that the subcontractors and suppliers of a project would receive their payments from the general contractor under the contractual obligations. In cases of non-compliance, this is the only efficient protection for subcontractors besides suing the contractor, as they can make direct claims on a payment bond in case the contractor is not abiding by the contract.

Illiana Expressway: the benefit of performance and payment bonds

The Illiana Expressway, also known as the Illiana Corridor, is a rather important and large-scale highway construction project for the states of Illinois and Indiana. It will connect Interstate Highway 55 in Illinois with Interstate highway 65 in Indiana. Works should start in the next few years but the project has already been marred by some land acquisition issues, thus it is imperative that its construction is smoother so that the public is secured against contractor’s default and similar problematic cases. The most appropriate guarantee in such major construction projects is the protection provided by payment and performance bonds.

Illiana Expressway
Illiana Expressway – Preferred Corridor Map
Credit: Illinois Department of Transportation

First of all, as mentioned above, the issuance of a performance bond means that the contractor has passed an evaluation by the surety company in order to obtain the bond. This is a valuable pre-selection. Furthermore, the surety company itself provides a safety net because it is required to pay any legitimate bond claims and then seek reimbursement from the contractor. This is surely another level of security for the public project and thus for taxpayers’ money invested in it. On the next level, the payment bond is the safeguarding tool for the subcontractors and suppliers on the public works project as it guarantees they will be paid by the winning contractor according to the contract.

As the ultimate interest of the contractor, the public entity in this case, is that the Illiana Expressway is completed fully within the time framework and with all contract clauses and subcontractors’ payments duly met, it seems that the bonding with performance and payment bonds is the most efficient way to provide protection for this completion. This is just one of many examples how performance and payment bonds can be really useful in public works, thus their importance is significant in such projects.

Illinois Currency Exchange Bond

Currency Exchange Bond
Illinois legislatures have enacted a new bill concerning check sellers, money transmitters, small loan companies, etc. The bill is titled SB 87/HB 159 and boosts the surety bond required for community currency exchanges from $10,000 to $50,000. This affects establishments providing services for cashing checks, money orders, etc. The Director of Financial Institutions is authorized to require a larger bond, but it can’t surpass the exchange’s outstanding liabilities. SB 87/HB 159 also boosts the required amount of the blanket bond covering agents in a statewide agency from $2 million to $10 million.

Surety Bonds Vs. Money In Escrow

Green energy is here to stay and the state of Illinois is taking advantage of it via wind farms. Once the wind farms have served their point, they must be decommissioned or removed for the environment’s sake; surety bonds are one way to assure that it happens. (more…)

Green Surety Bonds: Guaranteeing Environmentally Friendly Wind Farm

The interest in green energy still seems to be at its peak. A large wind farm is in the works to be built in Illinois but once the wind farm has served its purpose, time and money must be used to remove it for the environments sake; a surety bond will ensure that this happens.
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Illinois Treasurer Bond Update

Legislators in Illinois have enacted a new bill relating to treasurers within the state. The new bill is named HB 179 and allows the treasurer of the board of directors for library districts to acquire an insurance policy instead of the surety bond that’s currently required. The insurance policy provides protection against fraudulent doings of the district’s employees and officials and must be equivalent to at least 50% of the library district’s operating funds. HB 179 will become effective January 1, 2012.

Illinois Debt Settlement Provider Bond

IllinoisHB 4781 is a new bill that was enacted within the State of Illinois which concerns debt settlement providers. The new bill requires debt settlement providers to acquire a $100,000 surety bond. The original draft of the bill would have required a minimum $1 million surety bond, but it was modified in the House. The Director of the Division of Financial Institutions has the option to require a more substantial surety bond quantity calculated by the disbursements that the provider executed in the prior year. The surety bond must be issued by a State licensed insurance company able to perform the business of fidelity and surety insurance.