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Interesting Surety Facts

Surety bonds are contracts between three parties: the principal, surety, and obligee. These bonds have many characteristics you might not know about. Read on to learn more about surety bonds.

Ancient History
Surety bonds are ancient, mentioned in the Code of Hammurabi (circa 1754 BC), the Bible, and the Quran. To construct buildings, walls, roads, etc., ancient Roman ordinances required a surety. During the late 19th century, corporate surety began throughout America.

Trillion-Dollar Industry
The surety business brings in roughly $9 trillion worth of safety, while the direct written premium is more than $6 billion annually. The average loss ratio for surety carriers is relatively low, which makes it profitable as well.

Credit, Not Insurance
Most surety specialists consider underwriting a form of credit rather than insurance to focus on prequalification and selection rather than risk. Surety bonds require risk to remain with the principal. The bond protects the obligee. State insurance regulators have a say in surety bonds, though the risk is not transferred to the insurance company. Instead of premiums coming out from policies (as they do in insurance), surety bond premiums paid are “service fees” used toward the company’s financial support and overall guarantee.

Federal, state, and municipal governments have formed an arena for fidelity and surety bonds by way of statutes, regulations, ordinances, and court rules. In 1894, the United States Congress passed the Heard Act, which requires contractors to acquire surety bonds for public projects. In 1935, it was replaced by the Miller Act, which protects the contractual rights of labor and material for public works. Roughly all state, county, and municipal governments implemented similar legislation (also known as Little Miller Acts) as well. 

Law Enforcement
Frankpledge, an early form of joint suretyship, was used primarily in medieval England to force alleged criminals to appear in front of a judge. Tithings, or groups of ten households, were responsible for forcing one of their members to go to court if they were criminally charged. If the accused did not show up to court, the entire group could be fined.

To apply for a surety bond, reach out to Construction Bonding Specialists today!

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of experience, we work to discover solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit our website today.

Written by the digital marketing staff at Creative Programs & Systems:

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The Construction Season Is Upon Us

Get Your Bid, Performance, or Payment Bond Now!

Bid Bonds

Bid Bond is a prequalification indicating that the contractor is bondable for the performance and payment bond should they be read low or chosen by an Owner/GC/CM that they will enter into the contract and provide a Performance and Payment Bond.  

Performance Bonds

Performance Bonds offer assurance that the bonded contractor will perform according to all contract documents.

Payment Bonds

Payment Bonds offers an assurance that the bonded contractor pays for all materials and labor associated with the documents related to the contract.

While each of these bonds have specific criteria that has to be met to secure them, Construction Bonding Specialists, LLC knows what is needed up front to help expedite the process.  With our years of experience we know the best way to approach a surety to present a solid opportunity.  This is because we specialize in assisting contractors when any of these types of bonds are needed.  We can handle everything from simple/small bonds to more complex/larger bonds.  We’ve virtually seen it all.

The specialists at Construction Bonding Specialists, LLC can assist you with your application(s) today. Call or visit our website to learn more information.


For more information about our bonds visit our website or call 248-349-6227

Construction Bonding Specialists, LLC works with new and experienced contractors to find and solidify the most appropriate bond needed. We are a distinct surety-bond-only agency with decades of bonding experience. We’ll work with you to discover all the bonding solutions for any case, ranging from ordinary to challenging.

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Contractor License Bonds

Contractor License or Permit Bond: A contract license or permit bond involves three different parties: the obligee, the principal, and the surety. It is a promise that the surety makes to pay the obligee in case the principal fails to fulfill their statutory requirements. These bonds are typically required by cities, states, and municipalities.

Contractor License & Permit Bonds are required by individual municipalities throughout Michigan and around the country in order for construction work to be permitted. State licensing boards, and local municipalities all routinely require contractors to file a bond of one type or another to guarantee specific work done.


To obtain licensure or a permit, contractors need to get a license or permit bond from a surety bond company. The three parties involved are the Contractor (principal), the City, State or Municipality (obligee), and the Insurance Carrier (surety). The contractor license & permit bond not only benefits the contractor by allowing them to perform work within that jurisdiction; it helps others who could be involved or affected by unethical and costly business decisions. The bond ensures that the principal contractor will provide services in accordance with the Statute or Ordinance’s laws of the city and state or municipality, such as adhering to building codes.  

If the contractor fails to fulfill the terms of the Statute or Ordinance within the jurisdiction the bond would pay damages caused/ sought by the affected party through the Obligee (City, State or Municipality). However, the surety will not simply absorb the loss. If a claim is made against the bond, the principal must reimburse the surety for any money they paid out when settling it. To get rates for a Contractor Bond, contact us today!


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What is an Appeal Bond?

An appeal bond is required of a petitioner to set aside a judgment or execution from which the other party may be made whole if the action is unsuccessful. These bonds help protect the court from frivolous appeals that cost the court time and money. Appeals are always posted by the losing party in a court case.

Appeal bonds are regularly required of defendants and occasionally plaintiffs’ party to a civil suit to secure a higher court review. They are supplied by the appellant (plaintiff), who is appealing the court’s judgment and is usually in the amount of the original ruling (though it could be more). Appeal bonds are also known as supersedeas bonds or safety net bonds.

Appeal bonds…

  • Serve as a safety net bond, which protects the court
  • Allow the court to stay judgments while cases are on appeal
  • Guarantee the defendant’s original judgment against them will be paid if they lose appeal
  • Are required by the Federal Rule of Appellate Procedure 7
  • Must be paid to the court or a third party to demonstrate good faith

The amount of money required for the bond is often the actual judgment plus interest and is held while the appeal is debated. A paid assessment will protect the prevailing party if the losing party goes bankrupt during the appeal process. The appeal bond is also used to limit frivolous attempts in an appeal, as the appellant still has to pay the judgment upfront in the form of a bond, and might end up paying more ultimately, due to interest, fees, attorneys, etc. 


At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Contact us or call 248-348-6762 today. 

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What is a Subdivision Bond?

A subdivision bond is typically purchased by a landowner or developer when upgrades and/or changes are required by a local government authority. It guarantees the work is completed according to the terms set forth. In the agreement with the city, township, or municipality.

Examples of Subdivision Bonds

  • Street improvements (grading, paving, curbs, gutters)
  • Sidewalks
  • Storm drains
  • Water mains
  • Sewers
  • Landscape
  • Erosion control
  • Subdivision monumentation

These bonds provide financial assurance that the landowner will find and complete improvements through parcel land development.

Key parties involved in subdivision bonds:

  • Principal: the landowner/developer
  • Obligee: the city or municipality
  • Surety: the underwriter of the subdivision bond

A percentage of the engineer’s estimate for improvement costs are used to determine the subdivision bond amount. Subdivision bonds renew annually until a point at which the public entity requiring the bonds provides a release of the bond obligation to the surety. 

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Contact us or call 248-348-6762 today.

Written by the digital marketing staff at Creative Programs & Systems:

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Your Bond Department is Open

License & Permit Bonds • • Contract Bonds
Motor Vehicle Dealer • • Release of Lien
Appeal Bonds • • Mortgage Broker
Wage & Fringe Benefit • • Standard Markets
Right-of-way Bonds • • Bid, Performance, and Payment Bonds
Visit our website for more information, or call (248) 349-6227
With over 20 years of experience in the bonding industry, we can handle virtually all of your
construction and miscellaneous bonding needs:

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STOP Hunting for Surety Bond Support


This is the perfect time of year, BEFORE Tax Season, to discuss or review bonding lines and possibilities.  It’s also where Construction Bonding Specialists, LLC can help.

  • If a contractor is looking to grow and will be doing more bonded work a strategic meeting NOW can significantly help them in the future.
  • Taxes will be coming due and the way that a contractor approaches their End of Year can directly affect how a Surety will look at them.
  • Now is the time to talk about bonding even with a contractor that doesn’t do a lot of bonded work.  Demystifying the process now will help them be more effective later.



Listed below are just a few of the Miscellaneous Bonds that we can process for you: 

  • ICC Broker Bonds
  • Non-Vessel Operator Common Carrier (NVOCC) Bonds
  • Federal Maritime Commission (FMC) Bonds
  • DMEPOS Bonds (there is a new requirement for Dentists)
  • Release of Lien Bonds
  • Customs Bonds


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September Newsletter

Fall is certainly knocking on our door and with that there is a push to wrap up jobs.  Once all of the current jobs are finished oftentimes Municipalities and Schools find “surplus” monies that need to be spent prior to the years end.   Let us help make sure you’re ready to capitalize on these situations.

Final Consents of Surety

Its September, school is back in session and jobs for the schools are wrapping up.  Oftentimes a Final Consent of Surety is required by the Obligee.  If you are in need of a Final Consent of Surety here is the process to secure one:

  1. Forward the name and contact information of the person that Is overseeing the job.
  2. A Status Report is sent to this individual to have it completed.
  3. Once this Status Report is completed and returned to us, it will be reviewed for approval to issue the Final Consent.
  4. If there have been change orders the surety will bill for the additional exposure!  Always be aware of this and be sure to include your bonding cost when quoting change orders.
  5. Once the Surety approves it the Final Consent it will be issued.

DON’T FORGET:  Keep an eye out for additional opportunities that may arise and require a Bid Bond or Performance and Payment Bond.

Submissions Email

Please help us process your requests quicker by utilizing the following email for them:


This email will help assure that your request will receive the same, if not faster, attention that you have always received.  The email is monitored all day, every business day.  

Please make a note in your records and help us take great care of all of your bonding needs.

“Bonds Are All We Do!”

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