1. California Contractor’s License Bond Amendment

    August 17, 2009 by Lisa Grimsley

    CaliforniaThe SB 1432, which became effective on January 1, 2009, amended California’s law for claims toward home improvement contractors. The new law states that a homeowner may make a claim against the contractor’s bond only if the damages happened when the homeowner did not intend on selling the home. The law also makes a change to the time limit of making the claim, based on the contractor’s licensing period.






  2. Alabama Bid Bond Changes

    May 27, 2009 by Tracy Konopka

    On 5/16/08, the state of Alabama has enacted HB 442. The enactment allows state agencies to decide if a bid bond is required for service contracts or supplies. The prior law made bid bonds mandatory, which allowed for no flexibility, even when no bonding companies were willing to bond the work.






  3. Stimulus Package: Pros & Cons For The Construction Industry

    February 24, 2009 by Michael Weisbrot

    The stimulus package is absolutely gigantic. So much so, I thought I would create a list of pros and cons related to the construction industry pertaining to the bill. Many of the cons are items that the industry was pushing for, but did not get.

    Overall, the bill looks like a victory for the construction and surety industries. See below for details.

    PROS: CONS:
    The biggest investment in infrastructure for 50+ years
    No specified amount for school construction
    Passed with $8 billion towards high-speed rail (previous Senate version included $2 billion, while previous House version included $0)
    “State fiscal-stabilization� funds cannot be used for new construction of schools, only modernization
    General Stimulus: $110.7 billion (35%) is appropriated for projects in 2010 General Stimulus: Only $34.8 billion (11%) of the $308.3 billion will be spent on “shovel-ready� projects by 9/30/09, the fiscal year end for 2009
    Infrastructure Stimulus: 50% of funds spent on work to be started within 120 days of the enactment
    “Use it or lose it� policy for DOT, a 50% expenditure for within 120 days “Use it or lose it� policy is not in force for the following departments, but they must report to Congress on how they are spending their funds:
    DOD & VA – 30 days
    GSA – 45 days
    “Build America� tax-credit bonds can be issued by local and state governments in 2009 & 2010
    Small businesses may deduct income up to $250K of capital expenditures as well as a 50% deduction on depreciable assets (e.g. construction equipment)
    Businesses can carry 08’ operating losses to offset profits from previous years Only companies with less than $15 million in revenue can qualify
    A bill that requires public companies to withhold 3% of their contracts will no longer be effective for 2011 The bill will be effective for 2012





  4. Performance Bonds – How times change

    August 25, 2004 by Riskwriter

    Turning back the clock…..and bond agents working for a living.

    Performance BondingDo you recall the late 90’s and way early in 2000 when getting approved for contractors Performance & Payment bonds were as easy as having a pulse? “Oh, you’re breathing? You’re approved!” That time period was an interesting but a rather frightening time in the surety industry. All the bonding companies began to become more and more competitive in this dog eat dog industry, so much that sureties were giving things away to contractors! Waving your spouse from the agreement? SURE! waiving personal indemnity all together for that matter! Dropping rates down to $6 per thousand….the list goes on.

    Since the sureties have exceeded losses in the past couple years more than the losses they had throughout the whole past decade, has forced them to re-group themselves. Underwriting has taken an entire swing the other way and is incredibly conservative in all spectrums of underwriting. Aggregate bond lines have been sliced in half, rates have doubled, the re-insurers even writing surety have dropped to a measly 10 and all of this is all a snowball effect of one thing affecting another. However, In the end, it does change the industry in a positive way.

    Performance BondingFor one thing, it means that any contractor OR sub-contractor with a Performance bond in hand for the guarantee of their contract, likely, truly is qualified to get that job done-AND will get it done per the terms of their contract.

    The obligee (who is requiring the bond) won’t feel the reluctance in accepting a bond as they may have in the soft bond market previously due to the soft underwriting that was occurring. Previously, many contractors still defaulted on jobs, and did so more willingly with no personal indemnity on the line.

    Now, there is a rigorous underwriting process that each contractor must face. And there should be! Applying for a bonding line of credit and or Performance bond is just like applying for a line of credit from your bank. It is CREDIT. In this case, it’s not simply just to pay back a loan but to actually perform on a contract. Of course, with this type of guarantee the bonding company must make, their research into each contractor is complete.

    This makes performance bonds not only a stronger tool for the owner that accepts them, but it sure does make us agents work for a living!














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