Top 5 things you need to know about surety bonds
Top 5 things you must know
Transcript: Surety Bonds: Top 5 Things You Need To Know
Man: Is there anything I need to know before I apply for a surety bond?
JW: Absolutely! Let me tell you my top five things you need to understand. Number one - Price can vary drastically depending on what the bond guarantees, the applicant, the bond size and the agency it's placed with. This is all reviewed to determine the risk you pose to the surety.
JW: Number two - Surety bonds are not insurance for you, they insure whoever is requiring the bond. To you, they are a form of credit. If a claim is filed, the surety will pay the claim initially, but will look to you for reimbursement. Some of the confusion on this stems from a somewhat similar product called fidelity bonds, which are insurance for you or your clients.
JW: Number three - Accuracy of the information you provide is imperative. If the personal or business information provided is inaccurate, you could receive an inaccurate quote, or the bond can be rejected by the obligee, costing additional money and time to correct.
JW: Number four - Your personal credit and business financials can play a big role in the bonding process. Personal credit is always analyzed, but for larger bonds, business financials may also be evaluated. Sureties review these items to determine your financial strength, which helps demonstrate your ability to pay potential bond claims. Credit issues and unprofitable business financials can result in higher rates, and even the inability to be approved for some bonds. As the top U.S. bond producer, JW Surety Bonds can approve applicants even when others can't.
JW: Number five - The professional partners you choose to work with can make an enormous difference. The bond agency you apply with can affect whether you have access to the best sureties, low bond rates and fast turnaround time. Watch our video to learn more about choosing the right bonding agency. For contract bonds, working with a CPA familiar with the construction industry is beneficial. Construction CPA's can help increase bond lines, as they ensure your financial statements are properly prepared for surety review. Also, working with an attorney familiar with construction and contract law is helpful, as they can defend your rights in the event of any contract disputes.
Man: Who knew there was so much to consider! Thanks for all of the help.
JW: Anytime. Check out the rest of our video library to learn more about the world of surety.
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