Surety Bonds 101
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Bonding Company Guide
What is a Surety Company?
Before we dive into how to choose a bonding company that fits your needs, it’s important to define them and understand how they work.
Surety bond companies are usually large organizations that provide surety bonds, in addition to other insurance products (this is why some refer to them as “surety bond insurance companies”).
Due to how complicated the surety bond industry is, a bond company won’t work with and provide bonds directly to the public. Bonding companies use bond agencies that work directly with people who need bonding.
Choosing the Right Surety Bond Companies
Now that we answered “what is a bonding company?”, let’s go over how to choose the right surety companies for you. First, it’s important to understand that if you get a bond from a surety bonding company that doesn’t meet the necessary requirements, your bond can be rejected without a refund. Bonding companies must meet certain requirements to write your bond.
Surety Company Comparison Tool
If you'd like to see detailed metrics regarding the top surety companies in the U.S., you can use our free surety company comparison tool.
The tool allows you to review and compare historical surety metrics such as direct premium, market share, net loss ratios and more metrics that are important to review when analyzing a surety company.
Surety Professionals Will Find the Right Surety Bond Company for You
If you partner with a quality surety professional, you don’t have to worry about researching and finding the right bond company that meets your needs, as they will pair you with the best surety bond companies. A surety professional works with many highly rated and financially strong surety bonding companies, so finding the right one is as simple as explaining your bonding needs to them. Learn how our company only works with the top surety companies in the U.S., and how we have the final say when it comes to approving you for bonding. You can also read our guide to learn to how to get bonded and insured. See the list below that includes some of our highly rated bond company partners:
- Liberty Mutual Insurance
- Great American Insurance Group
- Philadelphia Insurance Companies
- The Hartford Financial Services Group, Inc.
- International Fidelity Insurance Company
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What Requirements Do Bonding Companies Have to Meet?
In order for a bond company to write any surety bond for you, they must be licensed in your state. If you need a bond required by the federal government, the bond company must also be listed in the Federal Treasury listing of approved sureties. If your bond company isn’t properly licensed, your bond can be rejected, forcing you to buy a new surety bond with no refund. Our company works with surety companies who are licensed in every state within the U.S.
A Construction Bonding Company Must Do More
If you need contract bonds for public construction jobs such as a bid bond or performance bond, obligees generally require construction bonding companies to have a minimum grade of B+ or higher from A.M. Best (a company that analyzes businesses' financial strength). The highest possible surety bond company rating is A++, and only a few companies have access to contractor bonding companies with this rating (us being one of them).
It is imperative to provide your bond agent any bond requirements from the obligee prior to getting approved for your bond. If you get your bond from any construction bond companies whose grade is lowered, your bond can be rejected, forcing you to pay for a new bond with no refund. Take a look at our construction bond guide to learn how to get the bonds you need for public jobs.
Avoid Outgrowing Your Surety Companies
Choosing the wrong bond company can prevent you from satisfying your bonding needs, also known as outgrowing the bond company (this often happens if you need bonds in several states or large bonds for public construction jobs). All bonding companies have surety limits, which determine the size and total dollar amount of bonds they can write for you. There is a single bond limit, which is the largest single bond the surety can provide you. Then there is the aggregate bond limit, which is the total dollar amount of bonds the surety can write for you.
Outgrowing the bond company can be a headache, as you’ll need to get approved with and obtain your bonds from various bond companies. If you work with an experienced surety bond processional such as our company you’ll never have to worry about outgrowing your bonding company, as we will find the perfect fit for your bonding needs.