How to choose a bonding company
How to Choose the Right Bond Company
Lose Money with the Wrong Bond Company
Bond companies must meet certain requirements to write your bond. If you get a bond from a bond company that doesn’t meet the necessary requirements, your bond can be rejected without a refund.
Good Agencies Will Find the Right Bond Company for You
If you partner with a quality bond agency, you don’t have to worry about researching and finding the right bond company that meets your needs, as your agency will do this work for you. A good bond agency works with many highly rated and financially strong bond companies. Finding the right bond company is as simple as explaining what your bonding needs are to your bond agency. 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
What Requirements Do Bond 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, causing you to buy a new surety bond with no refund.
Bond Companies Need More for Contract Bonds
If you need contract bonds for public construction jobs, obligees generally require bond companies to have a minimum grade of B+ or higher from A.M. Best (a company that analyzes businesses' financial strength). The highest possible A.M. Best rating is A++, and only a few companies have access to bond companies with this rating. 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 a bond company whose grade is lowered, your bond can be rejected, forcing you to pay for a new bond with no refund.
Avoid Outgrowing Your Bond Company
Choosing the wrong bond company can prevent you from satisfying your bonding needs, also known as outgrowing the bond company. 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 (this often happens if you need bonds in several states or large bonds for public construction jobs).
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