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How To Choose A Surety Bonding Company

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How To Choose The Right Bond Company

It is important to understand what a surety company is; it is an insurance carrier on the bond that guarantees you will abide by the bond terms.

Should you fail to meet the bond obligations and trigger a claim, the surety is initially responsible to pay it. Please continue reading to find out how to choose the right surety.

The majority of bond companies do not work with the public, as they use agencies to represent them. Choosing the right agency is often more important than finding the right bond company. Agencies will determine which surety is the best fit for your bond needs. Watch our video to find out how to choose the right bond agency.

Agents consider a variety of factors when pairing you with a surety such as:

  • Surety limits
  • Surety rates
  • Surety appetite

Surety limits, or financial capacity, will determine the size and total dollar amount of bonds you can obtain. There is a single bond limit, which is the largest single bond the surety can write for a single account. Then there is the aggregate bond limit, which is the total dollar amount of bonds the surety can write for a single account. Choosing the wrong surety bond companies can prevent you from satisfying your bonding needs, also known as outgrowing the surety.

Agents will also look at surety rates, which differ by the surety companies' rate filings with the state, and the surety's appetite for different bond types.

The sureties' appetite is determined by their past experiences with certain bond types, or what they guarantee. The bond guarantee determines the risk posed to the surety company, and some sureties have had negative experiences with particular bond types and industries and will avoid them. The risk of the applicant also influences a surety's appetite for different types of surety bonds.

Obligees (the entities that require surety bonds) have conditions that sureties must meet to issue surety bonds. To begin with, for a surety to issue any surety bond, it must be licensed in the state the bond will be filed.

For sureties to issue bonds required by the federal government, they must be listed in the Federal Treasury listing of approved sureties.

For contract bonds, obligees generally require sureties to have a minimum grade of B+ or higher from A.M. Best, which is a company that analyzes businesses' financial profiles. The highest possible A.M. Best rating is A++, and JW Surety Bonds is one of the few agencies that has access to sureties with the maximum rating.

If you get a surety bond through an unqualified surety:

  • The bond can be rejected
  • The surety may not provide a refund
  • You may be forced to pay for a new bond if the surety's grade is downgraded (contract bonds only)

See the list below including some of our highly rated bond company partners:

It is imperative to provide the surety or agent with any bond requirements from the obligee prior to approval.


Man: I need a surety bond, but I'm lost when it comes to which surety bond company to use.

JW: Ok, first let's clarify what a surety company is so you know what to do. The bonding company is the insurance carrier that is backing your bond. Most bonding companies do not deal directly with the public and require you to go to an appointed surety bond agency. A large agency like JW has a large list of bond companies to pair you up with the best fit for you.

Man: So what if I choose the wrong bonding agents?

JW: They could potentially set you up with a bonding company that does not meet the requirements. In that case, you paid for a very expensive piece of paper.

Man: What types of requirements do the surety companies need to meet?

JW: For one, the bonding company's financial strength rating may need to be a certain grade. If the grade is too low, the bond can be rejected. If the grade drops while the bond is in place, you might be forced to pay for another bond to replace it.

Man: I didn't realize that where I got my bond from mattered so much.

JW: It's also important to know that in suretyship, there is strength in numbers. Large agencies like JW can negotiate bulk bond programs to provide you the cheapest rate, simplified applications, and possibly get you approved when others can't. Larger agencies are also often able to obtain larger contract bond lines from construction bonding companies as well.

Man: Ok, ok I get it. I'll apply with JW Surety.

JW: That's the smartest decision you've made all day. Watch our other video to learn the importance of choosing the right bond agency.