What makes a good surety bond producer?
For new companies that are just starting to bond, it’s easy to get into a routine of thinking that your insurance agent or your accountant – or even the guy who wrote the bonds last time – is good enough. But when it comes right down to it, what you need is someone who knows how and will help you:
- Understand the bonding process and be able to anticipate your needs, including:
- Be responsive and not forget you’re a customer when things get busy.
- Give you the best coverage for the lowest rates – because that’s what they do all day long!
- Put together an action plan that will get you bonded, keep you bonded, and out of trouble.
- Teach you how to handle bonds so that they are easy for you to obtain when changes – both good and bad – occur in your business.
What should I look for in a surety bond producer?
The surety bond business is made up of good people who do all kinds of different jobs. There are specialists in construction, transportation equipment, labor, and service contracts.
There are small companies with only one or two producers – usually in a workmanlike office in an industrial area or strip mall – that have been around for years doing this same job for a lot of different customers. Then there are big companies with multiple offices and dozens of producers, some with pretty glitzy (and expensive) offices in the heart of downtown.
While all of this is not necessarily bad (some of it might be great), you need to ask hard questions about the level of service that each producer can provide.
If you’re just getting started and you need an office that will bring your bonds to where your business is, then a small company might be right for you. On the other hand, if you want an experienced player who has their own marketing people and can sell on a national or even international basis, then one of the big guys might be better.
Who should I call, a surety bond broker or a surety bond agent?
When you start calling around to talk about insurance and bonding, you will probably find that many of the people you talk to are really brokers – they charge commissions on whatever business they send your way. But what happens if you have a problem later on? Are you stuck with this broker, even if they can’t help you?
If you want a surety bond agent who will have your back when the going gets tough – and has been doing it for years – then you need to ask for one!
Asking for an agent will probably cost more, but it’s well worth it. After all, you wouldn’t buy a car without going to a dealership where they have cars in stock and mechanics on the premises. You would probably want to go to an established business that knows how to sell cars and fix them when they’re broken – not just offer advice over the phone or a free place for you to do it yourself.
With insurance and bonding, you want the same thing – a place where they know their business and will help you do yours.
How will I know if I’m talking to a legit surety bond producer?
There’s a lot to this business and there are some real rules and regulations that producers have to follow. But really, the best way to tell if you’re dealing with an honest person who knows their stuff is by asking them questions so they can prove it.
- What licensing do you have? (Any insurance producer who is going to handle surety bonds needs at least one license – a state insurance license.)
- What type of business have you been doing? (If they have been in the industry long enough to have handled your kind of bonding business before, then they can work for you now. They will know what’s needed and what paperwork you will need to provide.)
- What kind of business are your customers? (They should be able to tell you the type of business they typically bond to – construction, trucking, cleaning companies, etc.)
- How much money do I need to get bonded? (You probably won’t go very far with someone who is only willing to write a bond for a couple of thousand dollars. They should be able to give you a range to work with, from several thousand to hundreds of thousands.)
If they can’t answer these questions in detail, then move on. There are good people out there and, if you keep looking, you’ll find them.
How do I find a surety bond agent who understands what I want to do?
The first thing you have to know is that insurance and bonding are heavily regulated businesses. In fact, the surety bond business has been around a long time – it started with sea captains carrying letters of credit for their sailors before banks were doing it.
In most places, there are rules and regulations about how you have to get bonded – every business has different liabilities and there is a good chance that your business might not qualify for an industrial surety bond the local agent knows all about.
In this case, it can be time to find someone who specializes in commercial bonding. Call some of the big providers and ask them if they have someone who works with business owners. Ask them if these people are willing to do things like give you a free quote even if you can’t afford their service at the moment.
If they aren’t, then keep looking. You want someone who specializes in working with business owners and understands that not every owner has the cash sitting around to get bonded all at once.