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Surety Bond Blog

Performance Bond Tool Box – Funds Administraton

Performance Bond Tool Box – Funds Administraton

Using Funds Administration for Bonded Projects
Funds Administration, or “funds control,” is a tool often used by bonding companies help to mitigate risk on construction projects.  It is a common tool for sureties to place on contractors with credit issues, claims history, contractors involved in development or other business interests, or simply when an underwriter cannot make perfect sense …

 

Surety Bond Cost – Key Factors That Influence Cost

Surety Bond Cost – Key Factors That Influence Cost

Almost every week we have a call form a customer that says he was told by a friend that the surety bond should not cost more than X, yet we quoted Y.  (Our “Y” quote is almost always more than what the “friend” paid.) There are a lot of factors that go into the determining the cost of a surety …

 

Surety Bond Company Results Are Positive for 2013

Surety Bond Company Results Are Positive for 2013

The Surety Association of America (SAA) publishes the loss ratio of its member companies on a quarterly basis.  The loss ratio is basically the percentage of premium dollars that are used to pay surety bond losses.  While every company has a different expense ratio, rule of thumb in the surety industry is any loss ratio in excess of 40% means …

 

performance and payment bonds

What are Performance and Payment Bonds?

What are Performance and Payment Bonds?
In our last blog we discussed bid bonds, its obligations, and how to apply. While bid bonds are simply to submit a bid estimate for a specific project, performance and/or payment bonds are required once the contract is awarded to a contractor. Each bond is different, though it’s common that the public entities these …

 

What is a Bid Bond?

What is a Bid Bond?

A bid bond is required by an obligee (party the bond is protecting) when seeking a bid proposal or estimate for a specific project.  While bid bonds are generally required for public works construction projects, it can be required for nearly any public project including janitorial services, hauling, street sweeping, Information Technology, food delivery programs, among many more.  The bid …

 

Happy Thanksgiving from Surety 1!

Happy Thanksgiving from Surety 1!

On behalf of everyone at Surety 1, we want to wish you all a Happy Thanksgiving.  A time to relax, be with friends and family, maybe catch a football game, Surety 1 will be doing the same.  Our office will be closed at 3pm today, November 27 for the rest of the week.  We’ll be back writing bonds quicker than …

 

Importance of Communicating with your Agent

Importance of Communicating with your Agent

As surety professionals, most would agree the best working relationships are those with great communication.  The communication that leaves both the agent and the contractor on exactly the same page.  The surety is rarely surprised and the contractor always knows where they stand in terms of their ability to bond projects.  A win-win.  When communication is poor, both parties are …

 

Performance Bond Underwriting – The Three C’s

Performance Bond Underwriting – The Three C’s

We get calls almost every day with the simple questions on performance bonds, “What do you guys look for” or “How do I increase my bonding.”  While bonding can get complicated on different levels, the simplest answer is that performance/payment bonding credit is based on the surety industry accepted three “C’s.” They are Character, Capacity, and Capital.  Each characteristic has …

 

Subdivision Bonds 101 – The Basics

Subdivision Bonds 101 – The Basics

Similar to grading permit surety bonds, (click here for a refresher on the 3 parties of a surety bond, along with Grading Bonds 101), subdivision improvement bonds are a type of performance bond. They are required by municipalities to guaranty that public improvements associated with the development are completed such as street improvements, sidewalks, lights, curbs, gutters, drainage, etc.  While …

 

Surety Bond Fraud – Easy to Avoid Yet Continues to Occur

Surety Bond Fraud – Easy to Avoid Yet Continues to Occur

Every so often, a story comes out about fraudulent surety bonds.  Sometimes, it’s the contractor committing fraud by issuing his own unauthorized bonds as was the case of a Northern California contractor in 2010. Click here to read the article Other times it’s an agency issuing bogus bonds from admitted carriers without their knowledge most recently in the south involving larger …