Surety bonds are an often hidden yet critical component of doing business in a wide variety of industries. Many types of professionals are required to be bonded, including car salesmen, janitors, nursing home staff, and construction workers, and each bond’s primary focus is to protect against fraud or misconduct on the part of the bonded individual. Generally required by state, local, and federal agencies, surety bonds are in place primarily for consumer protection. If the bonded company or individual is found to be engaging in unethical or fraudulent activities, the wronged party can file a claim against the bond and receive compensation (paid for by the bonded company) up to the full face value of the bond if the claim is found to be valid. Surety bonds are exceedingly common in the construction industry and in fact, construction bonds are some of the most common surety bonds on the market today. If you’re a contractor, therefore, it’s critical that you find a bond company you trust and can rely upon to provide you good customer service when it comes to executing your bonds. Here are a few helpful tips to ensure that your choice is a good one.
- Pick an Experienced Provider. Professional surety companies with an extensive history of providing bonds can be a great partner for your business. Not only can they make the bonding process itself a smooth one with a well established underwriting routine, but they can also provide you with a great assessment of your business and its prospects. Check with the National Association of Surety Bond Producers to ensure that your potential surety company has a proven track record of success.
- Make Sure They Understand your Industry. Your surety company should have a well educated and experienced understanding of not just surety bonds, but the construction industry in general. Their awareness of the market will help determine the types of products they provide and the options they present.
- Understand the credit and underwriting process. Make sure that the underwriting standards and the credit criteria against which you will be evaluated is clear and easily understood. Your financial history is a critical component of the bonding process and it’s exceptionally important that you’re able to understand and follow the approvals process.
- Evaluate Industry Affiliations. Investigate what industry organizations and affiliations your potential surety partner maintains. The National Association of Surety Bond Producers is comprised of more than 5,000 surety agents and brokers and provides education and awareness. The Surety & Fidelity Association of America also maintains a large membership and is a well known organization in the industry.
- Go with Your Gut. Of critical importance is your own instinct. Trust yourself and, if something seems amiss, go elsewhere immediately. Surety bonds are a large investment and you need to feel that whatever company you choose is going to advocate for you and take a personal interest in your success.
This guest post was provided by Kevin Kaiser, a principal at SuretyBonds.com. AC-Lawyers in no way endorses the company but rather thought they provide relevant and useful information. If you want more information regarding surety bonds, visit their Surety Bond Education Program.