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Surety Bond Blog

New Bond Requirements for Connecticut Mortgage Lenders, Brokers, and Originators

New Bond Requirements for Connecticut Mortgage Lenders, Brokers, and Originators

Effective July 31st 2010- The state of Connecticut has new requirements for Mortgage bonds depending on the dollar amount of total loans originated.
Depending on how much business you write, your bond may no longer be sufficient to legally operate in Connecticut.
Here is a quick break down of the new requirements and how to calculate what level of coverage …

 

Finding a Surety Bond Producer

Finding a Surety Bond Producer

Since private work is not expected to rejuvenate itself in the near future, you’ve decided to enter the public work arena to supplement revenues.  It’s a great decision, where to begin?  The construction isn’t different; it’s the process of becoming qualified for public work that often stumps contractors starting to bid on public projects.  
The best place to start …

 

Small Contractors Need Help

Small Contractors Need Help

There is a conundrum throughout the Federal agencies awarding contracts, they are required to award 23% of all contracts to small business owner but few small contractors can qualify for projects of this size.  The agencies also argue that they do not have the funding necessary to manage several small projects instead of a single large project.  Small contractors can …

 

Current Economic Effects on Underwriting

Current Economic Effects on Underwriting

Given the current state of the construction industry, there are many people speculating what the future holds for construction workers.  The best place to start for predicting the future is to conduct proper analysis of current day conditions.  The weak economy creates a high risk environment for owners, their contractors and the sureties that bond them.  Surety bonds are truly …

 

Contract Surety Bonds and Today’s Market

Contract Surety Bonds and Today’s Market

To better understand the surety market, it is important to review the history of losses and profitability.  Over a 50 year period, from 1958-2008 the average loss ratio is 39.3% for surety companies.  The surety industry is very cyclical; it goes through periods of huge profits followed by periods with large losses.  The surety industry mirrors the construction industry, and …

 

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 …