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Steps to obtaining the ideal surety bond
by: Bruce Jones
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Word Count: 298
The surety bond market is a vast and somewhat intimidating place, especially if you are unfamiliar with the field. This article will attempt to guide you through the steps to take in order to obtain the surety which is right for your needs.
Let us first define just what a surety bond is. The generally accepted definition is that it is a 3-way agreement involving a principal, who undertakes to execute its contractual obligations, a surety, who will pay compensation to the other party (the obligors) to the contract for losses occurred that are an upshot from the principal's failure to complete.
OK. So now we know what a surety bond is, lets discuss what steps you should take in order to obtain the bond suitable to you.
Step 1)
Research which bonds companies have worked with your industry in the past. Choosing a provider which already is familiar with market area is important.
Step 2)
Choose a provider of surety bonds based on their national reputation. Local bonds companies often cannot give you as good a deal as you get with a large nationwide company. You will also have the added comfort of being able to read many customer reviews if you choose a provider with a national presence.
Step 3)
Depending on your own requirements, it may well be a good idea to select a bonds company who can offer you a quick turnaround time.
Step 4)
Establishing a good relationship with the surety bonds companies in your area can help you secure a more cost-effective rate. Even if they cant provide you with the bond you require, if you have a strong relationship they will be more likely to suggest a good alternative.
About the Author
Following these simple steps can help you gain better surety bonds for your business. If you would like to learn more about getting bonded please be sure to contact the specialists at JW Surety Bonds.
Comments
Sep 16th 2008, by markcalcaOh my goodness. This article is not the way you want to precede when trying to obtain surety bonds. Let’s break down the article:
Step 1) Unless you’re a contractor that unusually does unique construction, most all surety carriers are familiar with all aspect of the construction industry. Don’t waste your time researching the individual carriers – that is your agent’s jobs. They will know where you fit. The only caveat is that the insurance carrier used should be US Treasury Listed and at least an ‘A” rated carrier – rated by AM Best.
Step 2) Do not go to these “Bond Companies” that you find on the web that have a nationwide focus. Work with a local agent. Your local agent will be able to come to your office and really get to know what you do and how you do it. Once they gain a comprehensive understanding of your business, they can better represent you to the insurance carrier. These nationwide companies just work on pure volume and don’t have a vested interest in having your company succeed. Your local agent is a partner in helping you work through the process and making your company stronger in the process.
Step 3) Once you have a bond line established, you local agent should be able to turn your bonds around in short order.
Step 4) The rate you pay for your bonds is directly related to how well the insurance carrier understands your business, how financially strong your company is and how you have performed in the past. As your relationship grows, your rate goes down. The nationwide agencies can’t bypass this to get you a better rate. It is the insurance carrier that sets the rate not the agency. So it is best that you have a local agent that knows your business – not some agency 1000 mile away.
The bottom line is to contact an agent in your state and avoid the nationwide ones you find on the Internet. They will work with you through the process.
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