Surety Bond Education

If you are a contractor that is performing work in a public Right Of Way (ROW) you may be asked to post a Right Of Way bond.  The bond may be a requirement of obtaining the Right Of Way permit.  The bond is guaranteeing that work performed will meet all obligations and requirements of the permit and hold them harmless from any damage and resulting costs.  Many municipalities across the U.S. will require a Right of Way Bond to secure a Right Of Way permit.  A Right of Way is the area owned or controlled by a municipality including streets, […]

Bidders beware! Have you ever bid on a public project using a cashier’s check or money order as bid security? Be sure you understand what you’re guaranteeing with that cash! What is Bid Security? What is bid security? The bid security is essentially saying that if the contractor is low and awarded the project, they will enter into the contract at the price represented in the bid. Bid security ensure they will provide Payment & Performance bonds that guarantee the contract. The financial aspect of a Bid Bond protects the owner from financial loss if for some reason the low bidder […]

Here are some points to consider as you work towards building your bonding capacity. Before getting into that we’ll say that there are no hard and fast rules, only guidance, when it comes to bonding. There are too many variables to consider here.  But remember – the decisions you make every day will eventually show up in your financials a.k.a. your “Report Card”! Most of these areas take time and consistent effort to grow but we’ll start off the list with a couple that are immediately actionable. How Do I Increase My Bonding Capacity? Build your personal credit score. If […]

How to Get a Bid Bond Find the Right Agent Complete a Contractor’s Questionnaire Complete a Bond Request Form Prepare Your Financial Statements Assess Your Financial Situation How Do I Get a Bid Bond? 1. Find the Right Agent The first step in getting your first bond is finding an agent who specializes in surety bonding. Surety is a highly specialized niche of the insurance industry and can be challenging to navigate. Your surety agent is your advocate in the process and should be well-versed with the underwriting process, how a surety views risk, and work with a number of […]

What is a contractor license bond and how do you get licensed and bonded? In many states, contractors need to apply and qualify for a license in their given trade. Sometimes, this is at the state level, or can be required by local municipalities. Often, a contractor will have to pass a test evidencing proficiency in their trade. You may have heard of a contractor being licensed and bonded. If a contractor is licensed and bonded, she or he has obtained the license in their trade while also obtaining a contractor license bond. What is a Contractor License Bond and Why is […]

What is an indemnity agreement for surety bonds? As we’ve discussed previously, a surety bond is a three-party agreement between the Obligee, Principal, and Surety Company. The bond guarantees the principal will fulfill its obligations. We have also mentioned that unlike insurance underwriting, surety bond underwriting assumes a zero loss. How is that possible? Well that’s where the indemnity agreement comes in to play. Let’s take a look at what an indemnity agreement is for surety bonds: What is an Indemnity Agreement? What is an indemnity agreement? The indemnity agreement is a separate contract which transfers risk from the surety […]