Surety bonding is essential to the success and ongoing business of any construction or contracting company. Not every bonding agency, however, is created equally. Choosing the right service can make your company a success just as surely as choosing the wrong one can create critical problems that can cost you a lot of money.
The worst thing you can do is sign on to get bonded by a company that doesn’t understand what bonding is, how it works or that confuses it with insurance. Learn what to look for in a surety company, how to know “What surety agency is right for me?” and where to go for trustworthy and reliable bonding services.
Surety vs. Insurance
One of the biggest pitfalls in choosing a surety company is confusing bonding with insurance. Unfortunately, all too many insurance companies also claim to offer bonding services, and just as often, they don’t know the difference. At its basic level, insurance protects you, while a bond protects your clients.
Bonds are in place to cover the losses your clients, vendors, subcontractors and material providers suffer if you don’t complete your job. Insurance is to pay for liabilities you suffer if something goes wrong on the job, such as damage to equipment, lawsuits and the like.
Surety bonds are also a loan that you have to pay back. Insurance is money that you’ve already paid for through your premium. Never go with an insurance company that claims to offer bonds. Go with an actual bonding agency.
Understand the Bonds Offered and Those You Need
Know what kinds of bonds you’ll need for your bid – contractors’, payment, performance and others – and know what kinds of bonds the surety agency offers. Make sure that they’ll be able to offer all the services you need and do it well.
Since the surety company will have to pay out if you can’t complete the job on which you bid, you’ll need a company that is financially sound. Look for a company with decades of experience and a respected legacy of being able to pay out their bonds. No contractor wants to call in a bond, but when the worst happens, you need a company that will fill that need. Request the A.M. Best rating of the company or the Standard & Poor rating.
Authorized and Licensed
Just like you need licensing to work as a contractor in your industry, bonding agencies need to be licensed and authorized to do business in each state. Make sure the company with whom you’re speaking has the authorization and licensure to provide the services you need. You can check the U.S. Department of Treasury website to investigate this, or you can simply ask the company to provide their licenses for you to see.
What Surety Agency Is Right for Me?
Look for a company with a legacy of quality service, a great list of clients, a solid set of reviews and testimonials and all the services you need. If you’re looking for an outstanding surety agency with over 20 years of experience who can take your small- to mid-sized contracting company to the next level, look no further than National Surety Services, Inc. Learn a little about us and get in touch to get started today!