What Does a Surety Do?

A surety company issues bonds or guarantees on behalf of other entities essentially acting as an insurer to ensure damages in case of default of the party on whose behalf the guarantee or bond has been issued. Such guarantees or bonds are required by government entities, by private organizations and by the construction industry in order to issue work or licenses. These bond issuing companies generally do not work in the areas traditional insurance companies do, though many traditional insurance companies issue such bonds of obligation.

In many places even for something like an auto-dealership license the applicant has to provide a bond, in other mainstream cases, sureties are required from contractors to ensure performance and protect against default. This is one of the oldest methods of guaranteeing performance or obligations.

Essentially sureties are contracts issued by a company to an applicant for something – a license or a contract – where a third party requires a guarantee on the behavior and performance of the applicant. If the applicant fails to deliver on or keep promises, the surety pays up.

Civil surety bonds aren’t much different in principle from criminal bail bonds where there are also sureties working in an organized fashion, but most commonly, such companies are insurers who are engaged in insuring the work of civil contractors.

A surety bond differs from an insurance policy mainly in that while insurance policies are triggered off by the contingency of a event of remote probability, sureties are triggered off by an unpredictable event that is not unexpected in the line of work.

Companies in the industry issue sureties to guarantee that a principal would perform the obligations he promises to the oblige. This is very important in big projects and work where everyone associated with the work can be affected on the non performance of a single contractor. Construction bonds are used to refer to a variety of bonds required in construction work to prevent default of contractors and suppliers.

A principal cannot evade liability by failing in obligations as liability is joint and several with the bond issuer, and similarly, in most cases all defenses available to a principal are available to the surety.


How To Choose a Bond Broker & Surety Company?

Never underestimate the consequences of buying surety bonds through a slick talking company, who promise the earth, but who when the time comes to deliver are found wanting.

Irrespective of the size of your surety bond requirements, choosing a dependable, trustworthy and reputable bond broker and surety company is the first thing that you should consider – all else comes second. Selecting the right company is ensuring that the solutions that you seek, both for the short term and the long term and the obligations of the bond are met.

What is the first thing that you should see in your broker – check his credentials, see if he is properly licensed. Many are licensed but only in a few states. If you are embarrassed or a little shy of asking the broker for proof of his certifications, though no good broker will object to it, if they have nothing to hide. In fact they will flaunt their credentials but only if they are worth flaunting, the other option available to you is to go to State Licensing and access the access the licensing details on the website – here you will find names of all practicing brokers who are valid and active.

The second consideration would be to evaluate the market representation of your surety broker. If you find that he has access to a limited number of bonding companies, then it is more than likely that he will have limitations and constraints and will not be able to provide you with the ideal all-encompassing bonding solution that you are looking for.

A visit to the Ai Surety Bonding, a leading Canadian Surety Bonding Insurance Brokerage, website will reveal what a bonding brokerage should be all about. Ai Surety Bonding has years of experience in the surety bonding industry and is a trusted name in the business. Its brokers have proven track records that speak for themselves and they boast of qualified and talented support staff that ensures, that even after you have purchased the bonds, you are continued to be taken care of. They promise meticulous attention to detail, expeditious service and unwavering commitment to their clients business.

Ai Surety Bonding history and heritage and an outstanding repute and character, combined with the large volume of business over the years, provides them with a powerful platform on behalf of their clients.

The company is well placed to match your bond needs to the most apt surety partner to guarantee that you will have the bond of your choice, on the best approval terms and at the best possible rates. Ai Surety Bonding’s surety partners are the finest in the surety industry and have been specifically chosen to meet specific needs of the individuals. Ai Surety is equally committed to its clients in new businesses as it is to it Fortune 500 companies.

In conclusion, the surety bond broker should be well versed with the surety industry. Most newbies to the field equate it with insurance policies, but it is vastly different and much more diverse – ask him simple questions and see if he flounders. You will be amazed to find that there will be many who will be hard placed to explain the difference between a bid bond, a performance bonds, a surety bond and a fidelity bond.

Why Do Bonds Work? Because Good Surety Companies Ensure That They Do.

Many a time, when our friends or acquaintances seek assurance that what we are promising them will be done, we normally assuage their fears by saying, “My word is my bond?” However, whereas it may work with friends and relations, in businesses it does not – our word is just not enough. They require something more solid, something surer and this is where the need arises for a surety or guarantor to be the link between the two.

All the guarantor has to do is to issue a bond that whatever you are promising to do, you will do and you will do it as per the specifications of the contract and that if you fail to do it the surety or the guarantor will take over and ensure that the contract is completed and pay the first party, all monetary losses that he has incurred.

Here are two examples to further illustrate this point:

Suppose the school where you children study, collects the whole years fees in advance. You go to great lengths to arrange for the money, taking loans, borrowing from friends, digging into your savings and then suddenly you find that the treasurer of the school has disappeared with the cash, even before the school could commence.

As a licensed institution, the surety would respond and you would be compensated by them, whilst they in turn would target the absconding party to make good their loss.

In our second example, let us assume that the city where you live is floating tenders for the construction of a new bridge. Now all those who bid for the bridge have to be provincially or federally licensed businesses and regulations demand that they require bonds.

Before accepting the bids and giving the task to a particular contractor, the city’s municipality must ensure that the contractor has the requisite experience, know-how and most importantly the funds to bring the project to its desired conclusion.

However, if the contractor furnishes a bid bond, it is proof that he merits the job, as a credit-check must have been done on him, without which he would not have got the bid-bond. A bid-bond is the assurance that the municipality needs that they have chosen rightly. The bid bonds or the performance bond ensures that the job will be completed as per specifications and that if somehow the contractor falters than the surety will step in, lend its expertise, take over the project and see it to its culmination. At the same time it will seek damages from the contractor.

The question that arises now is that in the eventuality of the surety provider being as lax and slipshod as the defaulters in both the examples, than what happens – the municipality, the school and you the parents would be left in the lurch. Hence it is of the utmost importance that one chooses the surety firm wisely.

One such firm is Ai Surety Bonding, a leading Canadian Surety Bonding Insurance Brokerage, which caters to clients across the world. Testimonials from satisfied customers have revealed that they maintain the highest standards in everything that they do, with an unwavering commitment to honesty and integrity. Not only will they ascertain your requirements before recommending a bond, they will not forsake you after you have taken the bond. They will, through their proficient staff look after your requirements before, during and after you have purchased a bond, answering all your queries and even reminding you in advance of your bond renewal.

Surety Bonds: Understand Them Before You Buy

In layman, easy-to-understand terms, surety bonds guarantee the performance of a written contract according to its terms and conditions. Surety bonds have nothing to do with investing, in the business context, they are like insurance – they uphold a promise to do something, the contract is breached and the surety pays off to ensure that the pledges in the promises are met.

Types Of Surety Bonds:

Bid Bonds, which guarantees that if a contractor is the chosen bidder on any given project, he will enter into a contract and provide a performance bid. A performance bond promises that agreements in the contract will be concluded according to the terms and conditions mentioned therein and the payment bond guarantees payment of laborers, subcontractors, and material suppliers.

How Much Does A Surety Bond Cost?

Bond costs differ significantly. It is reliant on the type of bond, the applicant’s credit history; his financial performance is taken under consideration and the place where the bond is needed. There is a variance in fees charged by different surety companies and all states don’t charge the same amount. The actual cost of the bond can really be calculated precisely by the surety companies.

Why Is It Mandatory To Buy A Surety Bond?

It is a compulsory requirement for many federal jobs, construction jobs or by the court. There are many industries where, in order to protect consumer rights, the government mandates having bonds. Many a time businesses licenses are not issued until the business get surety bonds. Before you buy make sure that you really need one – if you are unsure ask your bond agents.

Are Insurance Policies A Better Bet?

Certainly not, insurance guards against risk, whereas surety bonds safeguard in the event of an unforeseen failure of the principal. A bond is like credit- it only has to be paid if the principal fails to complete the contract. Moreover insurance costs more because the holder is also paying into a general fund that will cover the insurance company, if ever they have to press a claim.

How To Be Certain That You Are Getting The Right Bond At The Lowest Price?

Whenever you are out buying anything, you always want to make sure that you are getting the best bargain. Ai Surety Bonding is the best place to go to. They are leading bond agents and have maintained a model centered on customer needs. By answering all your queries they take the guesswork out of your buying. The company will ascertain all your individual requirements before recommending a bond, or if you really need it. They will make your bond experience an enjoyable and fruitful one and have a proven track record of better service than most other companies.

Does Applying for a Bond Cost Money?

None, the bond application and the quotation are free of charge. Some companies charge for application but at Ai Surety Bonding the application and quote don’t cost you a penny – moreover, they answer your queries to your utmost satisfaction.

Will Not Having Good Credit Hamper Your Chances Of Getting A Bond?

Getting a surety bond means that the company considers you to be financially reliable. Even if do not very good credit, you can still get the bonds, albeit at a higher premium, on the other hand, a good credit score means a lower bond fee. Good bonding companies share special rapport with surety companies, where they will place your bonds. The company’s reputation will act as your credit and substitute for your bad credit – all the more important that you chose a company of repute and standing.