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Surety Bond Blog

How to Detect Surety Bond Fruad

How to Detect Surety Bond Fruad

There are certain things to look for when checking for the validity of a bond.  One of the first things is making sure the person signing the surety bond or their agency is appointed with the bonding company.  This can be verified by going on the Department of Insurance website, searching by name or license number.  The search will provide …

 

How Frequent is Surety Bond Fraud?

How Frequent is Surety Bond Fraud?

Surety bond fraud has been in the news lately, especially in the Sacramento region.  A case involving $3.5 million dollars surfaced earlier this year, concerning bonds in place for water meter installation.  Unfortunately, the County of Sacramento was given fake Travelers bonds by a general contractor that was suppose to supply and install water meters in the Sacramento area.  The …

 

Why have Surety Bonds in Construction?

Why have Surety Bonds in Construction?

Surety bonds are becoming ever more important in today’s challenging times.  Surety bonds are currently classified as insurance products even though they are more similar to credit institutions.  The current climate has created some large surety losses, which is causing many surety companies to tighten up their underwriting requirements.   Surety companies underwrite bonds expecting to have zero losses, surety bonds …

 

The Surety Perspective of Bond Ability Letters

The Surety Perspective of Bond Ability Letters

There are several reasons why the Letters of Bondability do not satisfy the intent of the owner or obligee.  First we must look at the letter from the perspective of the surety.   Prequalification of the contractor is one of the major elements of a performance bond.  It has the same relationship as lumber has to a carpenter.  When project owners …

 

What does the Bondability letter accomplish?

What does the Bondability letter accomplish?

The letter of bondability at best shows a perspective owner that the contractor has a relationship with the surety company. Frustrated obligees have sued sureties over the letters because they would not furnish the bond later to no avail.
The following is an excerpt from a letter:
If Contractor is the successful proposer and is required to provide performance and/or payment …

 

Why do owners require a Surety Bond?

Why do owners require a Surety Bond?

Having a surety bond benefits every party involved in the transaction.  The oblige, who is the owner of the project is given reassurance that contractor companies with available surety credit are financially sound.  This benefits the contractor because the surety helps the contractor to grow slowly while building up their credibility in the industry.  Also, the lender for the project …