4 Surety Bonds for Small Business

Surety bonds are often associated with insurance.  This is understandable for a few reasons.  Bonds provide coverage for losses that are incurred and are often sold by insurance agents.  The difference however is that with surety bonds they must be noted where as regular insurance does not.

In the article below we will discuss several types of surety bonds that small businesses need.  There are about twenty five thousand types of surety bonds available.  Below we will discuss the five most common types of bonds that a variety of small businesses should consider having before they begin operating.

Surety Bonds for Construction

Within the construction industry bonds are often required of contractors.  A license and permit bond is often required before a license is issued whereas performance bonds are more job specific.

License and permit bonds are required of contractors before a license can be issued.  This is to safeguard residents within the state from financial losses.  These bonds are often inexpensive based upon the contractor’s credit rating.  They can cost anywhere between two hundred and one thousand dollars.

Performance bonds are issued based upon the job.  It is issued to cover the performance that is contracted; this can be for a variety of reasons such as having a deadline to follow or a budget to stay within.  When a contractor is licensed and bonded it provides a financial confidence to their clients that the project they are contracted to provide will occur as stated within the contract.

Surety Bonds for Cleaning Businesses

When your occupation requires that you enter private property, such as in cleaning and janitorial services, it is important to acquire a janitorial service bond.  With the access workers are given to personal belongings it is important to have reassurance that businesses and homeowners are protected from theft.

When a cleaning crew is licensed and bonded they are providing extra assurance.  Their clients are protected from the service provider and their employees in case of thievery.  These bonds are inexpensive and communicate that your business is one that can be trusted.

Surety Bonds for Notaries

Integrity is important when it comes to notaries and the services that they provide.  A notary is a legal authority that authenticates documents.  A notary bond is purchased to protect against notaries that choose to act unethically.  A notary bond is usually inexpensive often as low as thirty dollars for a four year term and don’t usually provide a concern for those looking to become notaries.

This type of bond is issued based on a set of conditions that must be met in order for the notary to become licensed.  These conditions must be met before they are allowed to conduct notary services within a state.

Surety Bonds for Car Dealers

A motor vehicle dealer bond is required in order to provide protection against unethical practices that are committed by car dealers and their employees.  This is a relatively inexpensive business expense for most car dealers.  A motor vehicle bond prevents customers from being deceived by car dealers.  It offers assurance that car dealers will not sell stolen cars or sell a car based on misleading information.

As you can see is that surety bonds are not insurance but more a type of reassurance that the goods and services that are provided to consumers will be provided in good faith.  Surety bonds are purchased in order to prove that business is done in good faith.  It is an extra guarantee that goods and services are provided as contracted.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

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Surety Bond Hike Makes Change for Small Business

The Connecticut Business & Industry Association reports that small businesses will have more contracting opportunities beginning in 2017. A law recently signed by President Obama increases the maximum Small Business Administration surety bond guarantee percentage from the current 70 percent to 90 percent.

“This is the first significant legislative change to the surety bond guarantee program in several decades,” says Frank Lalumiere, surety bond guarantee program director at the SBA. “It will provide increased incentives for surety bond companies and bond producers to participate in the program, which will expand contracting opportunities for small businesses across the country.”

Surety bonds protect project owners in the event a contractor fails to successfully perform the contract. In such an event, the surety company assists the project owner in completing the contract.

The SBA does not provide direct surety bonds to small businesses; surety companies do. But through its Preferred Surety Bond program, the agency guarantees between 70 and 90 percent of the losses and expenses incurred by the surety company if the small business fails to complete the contract. This government guarantee encourages the surety company to issue a bond that it might otherwise not issue. In turn, with the backing of a surety bond, a contractor may bid on a project that otherwise it could not bid on.

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What is a Construction Bond?

A construction surety bond is commonly known as a contractor’s license bond.  It is used to make sure that a construction project is completed as stated within a given contract.  In the event that the contractor is unable to complete said contract on time, within budget or other ramifications stated within the contract the surety company will guarantee payment to the owner to prevent financial loss.  This leaves the contractor on the hook to the surety company to pay back the amount that was paid out by the surety company.

In short a project owner or oblige enters into a contract with the principal or contractor to complete a specified project.  Then the contractor or principal secures a surety bond from a surety company or surety broker who sells contractor’s license bonds.  Local surety brokers can be found throughout online searches by looking under, “surety bonding firms or surety bonding companies”.

If a contractor fails to complete the project as stated within the contract the surety company must compensate the owner of the project for any loss or find another contractor that can complete the contract as stated.  The surety company may then proceed to seek repayment from the original contractor for their losses.

When it comes to any federal, state or local government project the contractor is required, by law, to be bonded in order to bid.  In fact some areas require a bond be in place before they will even consider issuing a contractor a construction license.

Surety bonds don’t only protect the project owner they work to cover subcontractors that are hired in order to complete projects that are contracted.  The surety bond will cover the expense of suppliers, subcontractors and damage that occurs to the property as a direct result of the construction project as well as tools and materials that are damaged or stolen.

Construction surety bonds are only sold through certain agencies that are known as bond producers or bond agencies.  The job of a surety agency is to work with contractors throughout the entire process of obtaining a bond as well as creating a relationship where they continue to supply bonds to the contractor as their construction companies grow and take on new commitments.  A bond producer plays an important role.  They should provide the following services:

  • The surety company offers advice that increases the profitability of the company by looking into management and all the technical aspects of the business.
  • The surety company will help contractors with their relationships with other service providers such as industry experts like accountants and attorneys.
  • In order to ensure that the financial requirements are met by the contractor seeking a surety bond the company is responsible to review all financial documents that are required by contractors seeking bonds.
  • The surety company is responsible for ensuring that the contractor has a surety bond that matches up with their needs. Most surety producers have relationships in which they offer bonds to more than one company.  With this in mind it is important that the surety producer is able to maintain relationships with several various surety carriers at one time.
  • The main point of contact for a contractor is the surety producer. This remains the same throughout the entire bonding process.  The surety company must remain in contact with both the contractor and the carrier throughout the entire process of the project.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

 

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Basic Bonds In the Construction Industry

There are three basic type of bonds used within the construction industry.  They are the bid bond, the performance bond and the payment bond.   These three basic types of bonds are used to guarantee that contractor will perform the work contracted, at the price contracted within the period of time contracted.  If this doesn’t occur the bond company will pay the owner to prevent financial loss and the bond company will collect payment from the contractor.  Below is exactly how bid, performance and payment bonds work.

  • Bid Bonds: This type of bond is obtained to guarantee that the bid that is submitted is in good faith. It states that the contractor enters into the contract at the price that is bid and will perform the required performance and payment bonds.
  • Performance Bonds: This type of bond is obtained to protect the owner of a project from any financial loss if the contractor fails to perform the contractor as stated in the terms and conditions.
  • Payment Bonds: This type of bond assurers that a contractor will pay the price specified to subcontractors, laborers and material suppliers as guaranteed within the contract.

In order to prequalify contractor needs to prove to a sureties company that they are an acceptable risk.  It is up to sureties to accept the risk of contractor’s failure based on a thorough analysis that pre-qualifies the contractor.  This ensures that the contractors business is a risk worth taking.  It is an in-depth analysis that ensures the contractor’s business operations are legit.

The surety company must be completely content that the contractor meets certain criteria before issuing a bond.  The criterion looks something like the following:

  • High-quality references with integrity and solid business reputations.
  • A strong ability to meet all of their current and future obligations in respect to both financial and employee abilities.
  • Industry experience that matches the requirements that are stated within the contract.
  • Equipment that is necessary to perform the work that needs to be done or the ability to obtain it when it is needed.
  • The strength financially to support the desired load of work that is contracted within the contract period.
  • A credit history that is established and a relationship with a bank that extends a line of credit if needed.

As a surety company it is important that they are satisfied that the contractors that they have extended surety bonds to will satisfy their requirements. The contractor should run a well managed, profitable company that fulfills their word fairly and performs all of their obligations within a timely manner.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

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Top News in the Mentor-Protégé Program

Welcome to the third edition of Onvia’s Legal Landscape, a series designed to provide government contractors with a quick, but thorough, summary of important legal developments in government contracting and a plain-English explanation as to how these developments may affect contractors. In this issue, we discuss recent trends in federal, state and local government contracting. Contractors should keep in mind that state and local agencies often look to changes in federal regulations as a guide for future changes at their respective levels. Changes recently made in the federal arena are likely to trickle down to state and local governments soon.

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1) The SBA Offers Some Specifics on the Expansion of the Mentor-Protégé Program

As many government contractors may know, in February 2015, the U.S. Small Business Administration (SBA) issued a proposed rule aimed at expanding its mentor-protégé program. The proposed regulations would implement changes introduced by the Small Business Jobs Act of 2010 and the National Defense Authorization Act of 2013, and would permit a wide array of small businesses to participate in the SBA’s mentor-protégé program. Currently, only 8(a) certified firms can take advantage of the many benefits offered SBA’s mentor-protégé program, including a broad exception to affiliation for mentor-protégé joint ventures.

While this was great news for many back in February 2015, it has been nine months since this proposed rule was issued and we have yet to see an interim, or a final, rule. The delay has many government contractors asking when the SBA is actually going to put these changes into effect. Well, we now have some idea: Sometime in the first quarter of 2016.

On October 27, 2015, the U.S. House of Representatives’ Committee on Small Business Subcommittee on Contracting and the Workforce, chaired by U.S. Representative Richard Hanna, held a hearing entitled “Maximizing Mentoring: How are the SBA and DoD Mentor-Protégé Programs Serving Small Businesses?” Based on the testimony given at the hearing, and the information compiled in the Subcommittee’s related memorandum, it appears that a final rule will be issued in the first quarter of fiscal year 2016, and that the agency hopes to launch a pilot program sometime in the summer of 2016.

Key takeaway for government contractors:

The expansion of the mentor-protégé could mean a lot more flexibility for small businesses. HUBZone, SDOVSB and WOSB/EDWOSB companies would have the ability to joint venture with larger mentors without the risk of affiliation. This, in turn, would make these small companies much more competitive.

2) The Importance of Complying with the Specific Requirements of Bond Claims

Ok, so this isn’t really a “new” legal development, per se. The requirements relating to bond claims is an issue that has been discussed among government contractors since, well, since bonds have been a requirement. However, while bond claims are often discussed, they are also commonly misunderstood. Many contractors do not fully understand their obligations concerning timing, notice, or procedure to perfect a bond claim. This is particularly true when it comes to performance bond claims against bonded subcontractors. In this context, contractors often fail to comply with their obligations and are adversely impacted. A recent Missouri case is just the latest example of this, and serves as a harsh reminder that the failure to comply with bond requirements can nullify an otherwise legitimate bond claim.

In that case, a plaintiff-general contractor, Curtiss-Manes-Schulte (CMS), subcontracted work to Balkenbush Mechanical, Inc. (BMI) on a renovation project located at Fort Leonard Wood, MO. Safeco Insurance Company of America (Safeco) provided the performance bond for BMI. As the project progressed, BMI fell significantly behind schedule. CMS informed Safeco, through a “Contract Bond Status Query” that BMI was not progressing satisfactorily, the contract was 9 months past due and liquidated damages would be assessed. However, CMS did not declare the subcontractor “in default,” a requirement under the bond. BMI ultimately abandoned the project, and then filed for bankruptcy protection. After completing BMI’s work itself and incurring significant additional costs, CMS made a claim against Safeco under BMI’s performance bond, citing BMI’s failure to perform. Because CMS never technically defaulted BMI, Safeco refused to pay CMS’ demand, asserting that CMS had failed to satisfy the bond requirements. CMS then sued Safeco.

In assessing CMS’ performance bond claim, the United States District Court for the Western District of Missouri noted that the performance bond specifically provided that the subcontractor had to be declared in default, and, further, that Safeco had to be notified of that default. Because CMS never formally defaulted BMI, and, in any case, never informed Safeco that BMI had been defaulted, the Court found that Safeco’s obligations under the bond were never triggered.

Key takeaway for government contractors:

Make sure you are aware of the specific terms of each and every bond that could affect your interests. Contractors tend to pay close attention to “upstream” bonds relating to payment but forget about how important the rules are when it comes to “downstream” performance bond claims. It is imperative that all government contractors understand the terms of all relevant bonds, and their obligations thereunder, as well as any federal, state or local statutory or regulatory requirements relating to those bonds. Otherwise, they risk forfeiting a perfectly legitimate claim. If you have any questions about the terms of a particular bond, or the applicable regulatory or statutory requirements, consult a legal professional.

3) Third Circuit Creates “Offset” Exception for Damages Relating to State DBE Fraud

In the last issue of Legal Landscape, we talked about the increased importance of the False Claims Act and the uptick in fraud actions by the Federal Government, as use of the FCA has expanded. As previously discussed, state and local governments have followed suit by aggressively prosecuting contractors for making false statements, or claims, of various types and kinds. As part this process, many local governments have increased the amount of monetary damages, and broadened the types of penalties, associated with fraud and false claims actions, including suspensions and debarments. Overall, there has been a marked trend over the past five years toward the draconian enforcement of fraud-related regulations and statutes, the expansion of liability, and the imposition of increasingly serious penalties.

A good example of the above is the Federal Government’s Presumed Loss Rule, introduced by the Small Business Jobs Act of 2010. The Presumed Loss Rule provides that, if a concern willfully misrepresents its size or status to receive the award of a federal contract, subcontract, grant or cooperative agreement, the loss to the government is presumed to be the total amount expended by the government under that contract, subcontract, grant or cooperative agreement. In other words, if you lie to the government about being small to get a contract, the damages assessed against you will be equal to the total amount of that contract. That’s a pretty stiff penalty, but it is entirely consistent with the trend toward escalating enforcement and prosecution.

One recent case may signal a slight shift in the other direction. In United States v. Nagle, the Third Circuit found that the damages assessed against a contractor found guilty of fraud on a state government contract had to be “offset” against the fair market value of the services provided under that contract. In Nagle, the co-owners of Schuylkill Products Inc. (SPI) and its wholly owned subsidiary, CDS Engineers, Inc. (CDS), engaged in fraud-related crimes in connection with PennDOT and SEPTA contracts. In order to take advantage of contracts with Disadvantaged Business Entity (DBE) participation requirements, SPI and CDS – both non-DBE entities – set up a “front” DBE subcontractor, Marikana. SPI and CDS “subcontracted” to Marikana, but, in reality, they performed all of the work on Marikana’s subcontracts. SPI and CDS paid Marikina a fixed fee for its participation, but otherwise kept the profits for themselves.

When this scheme was uncovered, the owners of SPI and CDS were charged with fraud. In analyzing the appropriate damage assessment against the owners, the U.S. District Court for the Middle District of Pennsylvania determined that the amount of loss each defendant was responsible for would be equal to the face value of the contracts that the DBE front company was awarded. Such an assessment was consistent with the Presumed Loss Rule outlined above.

However, on appeal, the Third Circuit disagreed with the lower court’s damage assessment. The appellate court held that, in a DBE fraud case, the amount of loss attributable to defendants should be calculated by taking the face value of the contracts and subtracting the fair market value of the services rendered. The court further clarified that “fair market value” can be calculated by the value of the materials supplied, the cost of the labor necessary to assemble the materials and the value of transporting and storing those materials. In other words, the damages assessed to a defendant for DBE fraud must be decreased to account for the fair value of services actually provided by that defendant.

Key takeaway for government contractors:

Nagle dealt with DBE fraud committed in connection with Pennsylvania state contracts, which were funded through the U.S. Department of Transportation. The Nagle decision was rendered by the Third Circuit, which means the case could be considered controlling in Pennsylvania, New Jersey and Delaware. It is not yet clear whether other jurisdictions will carve out similar exceptions, or whether the majority of other states will adhere to something more similar to the Federal Presumed Loss Rule. It is further unclear as to whether the exception in Nagle would apply if SPI or CDS had misrepresented their own DBE status, rather than arranging for a front DBE subcontractor. In any case, the damages associated with a potential fraud matter can be quite severe. It is important to understand the rules and make sure that you and your subcontractors are not engaging in any conduct that might constitute fraud.

Original Source: http://www.onvia.com/blog/legal-landscape-top-news-in-the-mentor-protege-program-bond-claims-and-dbe-fraud

 

 

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Auto Dealer Surety Bonds in Claim Process

In this installment of surety bonds we will continue to look at major points of the claim process in auto dealer surety bonds.

Eligibility

Only certain consumers are eligible to process a claim against the auto dealerships surety bond.

–          Consumer Purchaser:  Most of the claims that a consumer will make are related to the auto dealer’s failure to report the sale and not producing a title for the vehicle.  This creates a multitude of issues for the buyer.  Other claims involve the dealership not paying off the vehicle that was traded in, when the mileage on the odometer has been changed or the condition of the car was not reported and clearly becomes evident after the purchase.

–          The Seller of a Motor Vehicle:  A seller may file a claim if an auto dealership fails to pay for cars sold to the dealership or through the dealership.  This seller may be another car dealer, an individual, a consignor, a regional or national auto auction.

Be Prepared

Auto dealers should follow these basic steps when a claim is presented against them.
–          Auto dealers need to understand and follow the rules that are set by your state’s department of motor vehicles.  It is important to meet all of the terms within the contracts to avoid complications later on.

–          Auto dealers should always be honest.  They should ask the claimant for proof of their loss.

–          All communication should be documented.  All correspondence, statements and agreements should have proper documentation.

–          Auto dealerships should always be proactive in finding a solution to problems that have arisen before an official surety bond claim.

Look for assistance from the surety bond agency

When a claim is brought to the attention of the surety bond company all of the parties involved in the argument to explain their side of the story.  The guarantee that is offered by the surety bond company is that if they don’t find the claim to be legitimate they will not pay.  The opposite is true as well, if the evidence is found to be against the dealership the dealer will be obligated to pay the claim up to the bond’s penal sum.

Bonding company’s provide legal defense on your behalf; often leading to a winning verdict on your behalf.  It should be understood that if they end up paying the claim due to the dealerships negligence the legal fees plus the amount of the claim will need to be reimbursed.

Protect yourself and your dealership

Claims do arise against auto dealer surety bonds.  It is important to protect yourself.  Be sure that your dealership follows all industry regulations.  If you are honest in your dealings with customers you have nothing to be worried about.

Keep all licenses up to date, renew bonds on time and file all necessary paperwork diligently.  If a claim happens to arise you will easily be able to plead the case against the dealership without hurting business.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

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Major Points Of The Claim Process In Auto Dealer Surety Bonds

To avoid confusion we will discuss some of the major points of the claim process in auto dealer surety bonds.

Surety bonds are not the same as an insurance policy.

A surety bond protects the consumer not the business.  The surety bond is an agreement that outlines an obligation of one of the parties, in this case the car dealer, to another, their customer, which is watched carefully by a third party, the surety company.  If there is a claim against the car dealer the surety bond company may need to pay the client based on the claim and then seek reimbursement from the dealership.  A car dealership that is bonded is financially obligated to pay back the surety if a claim is paid on your behalf.  No matter how long the dealership has been in business or how long it has been out of business, if a claim is levied against the dealership and the surety is paid the surety company will seek to get reimbursement on the paid claim from the dealership.

Eight of the most common bond claims that arise from used car dealerships.

–          Failure to account for the sale and/or supply a valid title as stated under the contract

–          Writing a check that does not clear or to not make a payment on a vehicle

–          Tampering with the automobiles odometer

–          Providing inaccurate or false information in regards to the cars past and current condition during the sale

–          Fraudulent activity in regards to the financing of the car

–          Selling vehicles that have been stolen

–          Failing to pay for the warranty that was purchased by the consumer

–          The inability to honor the written car warranty

In our next installment we will finish discussing the major points of the claim process in auto dealer surety bonds.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

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Congress Tightens Surety Asset Rules

The defense authorization also expands SBA-backed surety bonds

Tucked into the defense authorization passed by Congress Monday are little-noticed amendments that should eliminate much of the fraud that has characterized individual surety bonds and expand the Small Business Administration’s flexibility in backing bonds for small contractors.

The surety measure tightens up the rules for using individual sureties on federal projects by requiring the assets backing the bonds to be real and deposited into an account that is in the care of the federal government.

The measure also expands the SBA’s ability to back bonds under its guarantee program, from 70% to 90% of the loss paid by a participating surety, on a contract amount up to $6.5 million.

The amendments are contained in Section 874 of the National Defense Authorization Act, which President Obama is expected to sign. Major industry associations, including the Surety & Fidelity Association of America and the National Association of Surety Bond Producers, backed the measures.

NASBP, which has battled individual sureties in court and in legislatures, views the passage as a major victory for the association and the industry.

“We are confident now our five years of toil to curb individual surety abuses on federal construction contracts are paying off,” said Mark McCallum, NASBP’s chief executive.

Rep. Richard Hanna (R), a former contractor whose district is in central New York State, was a key sponsor.

ENR’s investigations of individual sureties in 2013 revealed extensive use of deceptive assets.

Original Source: http://www.enr.com/articles/37939-congress-tightens-surety-asset-rules-with-eye-on-individual-surety-fraud

Richard Korman
November 12, 2015
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Carwash Owners Sue NYC Over New Surety Bond

A group of carwash owners have filed a lawsuit against New York City charging a new law illegally favors unionized carwashes.

The Association of Car Wash Owners lawsuit centers on rules that require owners of nonunionized carwashes to post $150,000 surety bond before obtaining a license. Unionized operations pay only $30,000.

The association says the two-tiered system is illegal.

Association attorney Michael Cardozo tells The New York Times the rule gives those who have collective bargaining a competitive edge.

He says “governments can’t put their thumb on the scales of whether a company should unionize or not unionize.”

The union-supported Car Wash Campaign, which represents community groups, said the $150,000 bond is “designed to secure worker wages against wage theft, and to protect consumers and possible creditors.”

The city Law Department says it will review the merits of the complaint but believes the law serves to protect low-wage workers.

Original Source: http://www.insurancejournal.com/news/east/2015/10/22/385822.htm

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Comparing Surety Bonds/Insurance Part II

In our last installment we began comparing surety bonds and insurance.  Many people are under the misconception that because of the similarities between surety bonds and the fact that often insurance companies offer them that they too are a form of insurance.  This however is not true.  As we previously discussed surety bonds are an agreement between three parties as well as that with a surety bond a loss is not expected instead a guarantee in case an obligation is not met.  Insurance on the other hand is an agreement between two parties where a loss is expected.  At some point you expect an insurance policy will pay out whereas with a surety bond you don’t expect to ever have to receive a payout.

A company offering surety bonds expect to recover any losses occurred.  If the principal defaults on the contract and the surety bond have to pay the obligee the surety expects to get repaid from the principal.  The surety has loaned assets to the principal and therefore will seek reimbursement.  Insurance claims are never expected to be repaid.  In fact with an insurance policy a claim is expected.  The whole purpose of insurance is to cover any losses the insured has experienced.

When the premium is paid on a surety bond it is acting as a service charge for the bond by the principal.  In fact surety companies get to be incredibly selective when choosing companies that they agree to bond.  This is because bonds serve as a non-collateral loan unlike a car or mortgage payment.  A surety company asks for a fee anywhere from half a percent to three percent of the contract amount.  The fee will be dependent upon the financial strength of the principal.  The premium is usually paid on an annual basis.

This is different than insurance premiums in that the premium that is paid is to cover the expenses and losses that are expected to occur. An insurance policy is something that nearly everyone can be issued.  The premium that is paid will depend upon the risk of the person or people being insured.  The greater risk to the insurance company the higher the premium.

As previously stated, surety companies are incredibly careful when choosing companies that they bond.  Years of running a successful business, financial stability and a record of completing projects on time and within the projected budget allotted within the original contract.  Agents handing out surety bonds are trained to ensure they don’t make loans that will default.

Insurance agents however are a lot more flexible when it comes to writing insurance policies.  Insurance companies offer up a higher volume of business in order to make a profit as well as cover any losses experienced.  This allows agents to be flexible with whom they offer insurance policies to.  Although as an example, if a car owner is seeking insurance and they have been in multiple accidents they will pay a higher premium then a client who has not been involved in an accident or had a previous ticket.

There are key distinctions between surety bonds and insurance policies.  Although they function differently they both meet a need that protect someone from experiencing a loss.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at http://www.bondingspecialist.com.

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