Surety Bond

One of the first questions people ask when they are purchasing
something is, "What does is cost?". There is no exception when
it comes to surety bond shopping. Unfortunately, bonds are
really considered a form of credit and the same rate does not
apply to all applicants. It is not that agents do want to give
you a better idea of the costs of a bond, it is that they can
not without applications being completed.

Usually, once a principal is told that bonds are really just a
form of credit they respond with "My credit score is...What
would the rate be for me?". Most surety bond programs are not
written exclusively on personal credit. Therefore, a rate can
not be given from the owner's personal credit information alone.
Rates are typically underwritten based on, but not limited to:
business financial statements for the company, personal
financial statements for the owner(s), personal credit history
of the owner(s) (not only the score), owner's resumes, etc. For
an agent to tell the principal the cost of the bond he/she would
have to review a good amount of information.

Often, when a principal hears that they can not obtain a quote
without completing applications, they want a ballpark figure.
While a good agent can get an idea of where an applicant might
fall, it is far from being accurate. For instance, a standard
market rate for commercial surety bonds are around 1-3% of the
amount of the bond. However, there are numerous factors that
could put an applicant into a high risk market which is closer
to 15% of the amount of the bond. As you can see, agents are
hesitant to give a "ballpark figure" when the range is so large.

If you are a principal shopping for a bond let me give you this
bit of advice. Do not simply complete applications for every
agency you can find. Do some research, as the knowledge of
agents varies by a frightening amount. Our industry is small,
but still has it's fair share of what I call "paper pushers",
rather than agents. An agent will review your file and submit it
to a couple of bonding companies where he/she feels you will
obtain the best rate for your unique situation. A "paper pusher"
will simply submit your application to every surety they are
appointed with. You might think that these paper pushers are
doing you a service by submitting you to more companies, but
they are doing quite the opposite. For one, some sureties will
pull credit on a principal whether the agent submitted the
application with a credit report or not. This could result in a
long list of credit inquiries which could drastically effect the
owner's personal credit. Some bonding companies will also turn
down principals if they receive the application from more than
one agent. The sureties that practice this policy feel that the
principals look desperate and do not feel comfortable extending
them their surety credit. I am not saying you should only submit
to one agent, but be sure to communicate with all agents
involved that they are not the only agent. Also, be sure to find
out what bonding companies each agent will be submitting to.
These simple precautions could save you from tremendous headache
down the road.

When looking for a surety bond, know that you will not be able
to get a good idea of the cost until the agent is able to review
your applications. Some agents may be willing to give you a
ballpark figure, but keep in mind the ballpark is quite large in
size and your actual quote can vary greatly. If you decide to
use more than one agency, be sure you choose them wisely and
keep communication as to what bonding companies the agents are
submitting to.

Surety bond - Wikipedia, the free encyclopedia
Frequently Asked Questions (General) | JW Surety Bonds
Surety, maintenance and performance Bonds

Explore our Selection of Sites about Surety Bond :

Find what you are looking for by doing a direct search at Sitescorner Net