Posts Tagged ‘surety’
Saturday, January 30th, 2010
When you apply for a bond the surety will evaluate the following things
Experience:
Some surety companies won’t write your surety bond if you don’t have experience or if you are a new business. If this is your case then you may have to be placed in a non-standard surety bond program.
Credit:
For a standard rate the surety company is looking fro a score above 675. If you have a low score or bruised credit them you may have to apply for a non-standard surety program
Assets:
Even if you have good credit and experience, you still must have the assets to support a claim. If you have a 700 credit score, but you have $0 in the bank you may have to be placed in a non-standard surety program.
Each scenario is different and there are exceptions to the rules. I have seen clients that have excellent credit and no assets and still qualify for normal rates. I have also seen clients that have low credit scores and plenty of assets qualify for normal rates. So don’t get discouraged there are markets that can help you in almost all situations.
Tags: cost of surety, credit, surety, surety bond
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Monday, October 12th, 2009
Why are bonds being required?
A bond is usually signed into law to regulate business and safeguard the public against fraud. A surety bond helps the client seek financial compensation from breach of contract or if they have been defrauded of money.
Underwriting for these bonds
Loan modification bonds are underwritten similar to a loan. The surety agent will review the principal’s credit, personal financials as well as work experience. The surety will not only evaluate the clients personal financial condition they will review the business’s financial stability too. The underwriter will request a business financial statement usually a year end statement and the company’s most current quarterly statement. We understand will most of these bonds that a yearend financial statement may not be applicable since you may be a new business. If this is the case other underwriting may be required to obtain surety credit. Keep in mind that every scenario is different since everyone’s financial situation is not the same.
Tags: loan modification bond, surety, surety bond
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Thursday, August 27th, 2009
AB 1319 – Talent Service. Provides that prior to advertising or operating in business, a talent service shall file a bond with the Labor Commissioner a surety bond in the penal sum of $50,000 this is a conditioned upon compliance.
The obligee for the talent Services bond shall be in favor of, and payable to, the people of the state of California, and shall be for the benefit of any person injured by any unlawful act, omission, or failure to provide the services of the talent service. The Surety bond cost as well as approval is based upon the principals credit and financial condition.
This bill is currently in the senate for a second time,amended and re-referred to committee on appropriations
Tags: California, surety, surety bond, Talent Services
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Wednesday, August 26th, 2009
Surety protecting business
In these tough times you need to make sure that your assets are protected. What happens if an employee steals from you or one of your checks is forged or altered?
Is there a insurance policy that can protect you from this? The answer is yes there is. A surety bond can protect you from these everyday occurrences.
This bond is typicality called a fidelity bond. A fidelity bond is more like an insurance policy than a bond because with a fidelity bond claim you do not have to pay the surety back. You need only to pay the deductible and the surety takes care of the rest. The surety company offers a wide range of products that can be added to your policy such as employee theft inside the premise as well as off site. You can add coverage for forging as well as alteration of checks. The bond amount can also be adjusted to fit your growing business needs.
The cost of fidelity bonds
You would think with the exposure to the surety that fidelity bonds would be expensive, but there actually are not. Many factors are involved to determine the cost of a fidelity bond. The rate of the surety bond is also different for each surety. A few ways a surety may determine the bond rate may be by the class of business, how many employees, cash exposure and checks and balances in place to protect the company from a claim.
In this economy protecting and securing you company’s future is vital, so protect your business with a surety bond.
Tags: amount of bond, business, cost of bond, fidelity bond, surety, surety bond
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Tuesday, July 28th, 2009
I need a surety bond, and I don’t know what type I need? An easy way for you to find out what type of bond you need, besides calling us, is to call the obligee. The Obligee will have the direct answer since they are the entity that is requiring to carrier the bond. Normally if you are applying for a license it is a State Department. Permit may be needed by the state as well, but most of the time it is the city whom needs them. It is also helpful to check your application that must be returned to the state. The licensing packet usually has a copy of the bond form and its requirements.
How much will my Surety Bond Cost?
The Cost of your surety bond depends. The Rate is determined by State, type of Bond, you credit, your personal financials, business financials and risk. All scenarios are different so some of the above listed information may be required or not. Some bonds like, notary bonds are not based on credit or financials. Notary bonds simply have a filled rate, were other bonds have a sliding scale. The reason for that is unlike MVD bonds , contractor license bonds, and Mortgage broker bonds, notary bonds claim ratio is low for now. So the cost of the bond may start out at a 2% but the rate can jump up to 25% depending on your scenario.
Why do I Need a surety bond?
A surety bond does not protect you or your business, it protects the obligee. The obligee requires Surety bonds to protect them from, monetary compensation, breach of contract, payment of certain taxes, fraud and whatever else they have weaved into the bond form. Unlike insurance surety bonds are a requirement and must be met before you can start or continue operating your business.
Tags: bonding, contractor license bond, how much does a surety bond cost, License and permit bonds, license bond, notary bond, surety, surety bond
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Tuesday, June 16th, 2009
License and permit bonds are issued as per the obligation of the government in order to ensure an assured performance and to carry on the business legally. License bond is issued all over the planet and it has been issued to someone who engages in the activity of business in the state. These bonds are now issued in all part of the world so as to satisfy the requirements of the customer officially and meet their requirements without any default act. Permit bonds are issued to the candidate of license and permit from the state as per the statute and the ordinance of the state.
These bonds have to be received from the licensing department or from any other divisions of the state. As the applicant of any state applies for these bonds in the state, he has to acquire it from the state from where he requires. Nowadays, these bonds have been issued by all the states as per the statute and ordinance issued by the state. All license and permit bonds have been issued by every surety bond company to assist the customers of the state.
Tags: bond, License and permit bonds, license bond, surety
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Monday, June 8th, 2009
A bid bond is surety bond that guarantees the obligee that the principal will be able to honer their bid. Some times obligee’s will not accept cash for the bid only a bid bond.
If the contractor has the lowest bid they will be awarded the contract. Once this occurs the bid bond will turn into the final bond. They surety will still need to see the top three bidders before the payment and performance bond will be issued. If there is to much of a bid spread the surety will not issue the contract bond. If the bid is closed the surety will require a letter from the obligee stating that. Bid bonds help weed out contractors that can not support the project financial.
How bid bonds help contractors
Bid bonds help contractors free up working capital because if they did not have a bid bond the contractor would have to furnish cash in lieu of the bid bond.
Tags: bid bond, contract bond, performance and payment bond, surety
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Friday, June 5th, 2009
What is bonding?
Bonding is where a principal obtains an extension of surety credit. In most cases when you refer to bonding you are referring to a contractor that has obtained bonding for their business like a bond line.
What is a Bond Line
A bond line is where the contractor has a line of surety credit to be used for future construction projects. Underwriting for performance bonds can be a long process but if you a bond line you do not have to reapply for every bond or bid bond you need. When you have established a bonding relationship with the surety the surety normally requests updated financials every quarter.
What is a Bid Bond
In order to obtain a bid bond you must first qualify for what the final bond will be. There is some confusion about bid bonds. You must qualify for the total contract amount not just what the bid bond will be. So if you need a $10,000 bid bond the surety is not underwriting off of that amount, but what the final bond will be. Usually a bid bond is an percentage of the total contract amount so if your bid bond is $10,000 and it is 5% of the total contract amount the final bond needed would be $200,000. So the surety will underwrite your application off of the final contract amount
What is a Final Bond
A final bond is also called a payment and performance bond. A final bond is when you have been awarded a bid. The bid bond than turns into the final bond you must sign the final bond reflecting the full contract amount and turn the bond into the obligee.
What is a Contractor license bond
A contractor license bond is a state requirement giving you the legal ability to perform constructions jobs in the state your business is operating in. Obtaining a contractor license bond is usually the last step for the state to grant you your license.
Tags: bid bond, bonding, contractor license bond, contractors, final bond, Payment Bond, Performance Bond, surety
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Friday, June 5th, 2009
New surety bond requirement for California the $100,000 Foreclosure bond which must be written for a two year term. All foreclosure consultants must carrier this Surety bond along with paying an $850 licensing fee and registering with the state. With influx of complaints and fraudulent acts commented by foreclosure consultants have forced the state to do something. “California is awash with con artists who prey on vulnerable families facing foreclosure,” said state Attorney General. Brown said those who fail to register and post the bond will be in violation of state law, and subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. Consultants are required to have the bond no later than July 1st. If you need fast service and a company that flexible underwriting give us a call so we can help you stay complaint with the new state mandate.
Tags: $100000 Foreclosure bond, california Foreclosure bond, consultant, Foreclosure bond, Foreclosure consultant bond, surety
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Wednesday, June 3rd, 2009
A surety company is the entity that is backing the bond. The bond form is not provided by the Surety Company but by the principal. This does not mean that the surety does not have a copy of the bond but it may be outdated. Always check with the oblige for the bond form. After the surety company has approved your application the surety will require a GIA (General Indemnity Agreement) along with payment and other underwriting conditions. Once the surety company receives the original documentation they will then issue the bond. The bond consists of two parts the first part is the bond form. The second part of an issued bond is the Power of Attorney. When you receive the original bond it should have the Power of attorney signature, Surety company seal as well as a power of attorney. A common mistake occurs when the principal receives the bond is where to send it. Please don’t send the original bond back to the surety company. The Surety bond should be sent to the obligee unless specified differently. If you send the bond back to the surety they may loss it and your license will be delayed it is the principals responsibility to deliver the bond to the appropriate place.
In order to become a surety bonding company you must file with the Department of Insurance “DOI”. Every state has different criteria for the company to meet such as financial strength, and you must file your company with each State. The State does not assign a rating normally an independent third party does. After reviewing the risk by an entity such as AM Best or Fitch a rating is assigned. In order for a surety to write bonds for the Federal Government the surety must become Treasury listed also known as T-Listed. So if you need a federal license like an ICC bond check to see if they are T-Listed.
Without surety bond companies when a company performs work for the federal government our tax dollars would be in jeopardy.
I hope this has helped you, you can find out different types of surety bonds and other surety news on our Surety bond blog. What to know what is the cost of a surety bond is ? How much a surety bond costs and how a surety bond agent underwrites a bond.
Tags: surety, surety bond, surety bond form, surety bonding, Surety bonds, surety company
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