What qualities do you look for in a surety bond producer?
It’s easy for young firms just getting started with bonding to fall into the trap of thinking that your insurance agency, accountant, or even the man who drafted the bonds the previous time is good enough. But, when it comes down to it, you need someone who understands what they’re doing and will assist you:
- Understand the bonding process and be prepared for your demands, which may include:
- When things become busy, remember to be responsive and to remember you’re a client.
- Because that’s what they do all day, they’ll provide you with the finest coverage at the lowest costs.
- Create an action plan to get you bonded, keep you bound, and keep you out of trouble.
- Teach you how to handle bonds so that you can get them quickly when your firm undergoes positive or negative developments.
What characteristics should I look for in a surety bond company?
The surety bond industry is made up of good people who execute a variety of tasks. Construction, transportation equipment, labor, and service contracts all have specialties.
There are tiny enterprises with only one or two producers that have been performing this same task for a variety of customers for years, generally in a workmanlike office in an industrial area or strip mall. Then there are the large corporations with many offices and hundreds of employees, some of which have glamorous (and pricey) headquarters in the center of downtown.
While none of this is inherently negative (some of it might be fantastic), you must ask tough questions about the degree of service that each manufacturer is capable of providing.
A small business can be appropriate for you if you’re just getting started and need an office to bring your bonds to where your business is. One of the larger players, on the other hand, would be ideal if you want an experienced player with their own marketing team and the ability to sell on a national or even worldwide level.
I’m not sure if I should contact a surety bond broker or a surety bond agent – what should I do?
When you begin contacting around for insurance and bonding information, you will likely discover that many of the persons you speak with are really brokers who charge commissions on any business they refer your way. But what if you run across a difficulty later on? Are you obligated to continue working with this broker even if they are unable to assist you?
If you want a surety bond agent who will be there for you when things get rough – and has done so for years – you should ask for one!
Requesting an agent will almost certainly cost extra, but it is well worth it. After all, you wouldn’t buy a car unless you went to a dealership with automobiles on the lot and mechanics on site. You’d probably want to go to a reputable company that knows how to sell automobiles and fix them when they break down, rather than someone who just gives you advice over the phone or offers you a free spot to do it yourself.
When it comes to insurance and bonding, you want a location where they know their stuff and will help you with yours.
How will I know whether I’m speaking with a reputable surety bond company?
There’s a lot to this industry, and manufacturers must adhere to certain norms and regulations. However, the easiest way to identify if you’re dealing with an honest individual who understands what they’re talking about is to ask them questions and see if they can prove it.
Consider the following scenario:
- What kind of permits do you have? (Any insurance producer handling surety bonds must have at least one license, which is a state insurance license.)
- What kind of company have you been running? (If they’ve been in the industry long enough to have dealt with your type of bonding previously, they can work for you right now.) They’ll know exactly what they require and what papers you’ll have to supply.)
- What type of business do your clients run? (They should be able to tell you what kinds of businesses they usually bond to – construction, haulage, cleaning services, and so on.)
- To become bonded, how much money do I need? (With someone who simply wants to sign a bond for a few thousand dollars, you’re probably not going to get very far.) They should be able to provide you with a selection of options to choose from, ranging from a few thousand to hundreds of thousands of dollars.)
If they are unable to provide detailed answers to these questions, go on. There are decent people out there, and you’ll find them if you keep seeking.
How can I locate a surety bond agent that is familiar with my needs?
First and foremost, you should be aware that insurance and bonding are highly regulated industries. Indeed, the surety bond industry has a long history; it began with sea captains holding letters of credit for their men before banks became involved.
There are restrictions and regulations in most regions concerning how you must be bonded – every firm has distinct obligations, and there’s a strong possibility you won’t qualify for an industrial surety bond that your local agent is familiar with.
In this instance, it may be necessary to seek the services of a commercial bonding expert. Ask some of the larger carriers if they have someone who deals with small businesses. Inquire whether these individuals are ready to do things like provide you with a free quote even if you are unable to purchase their services at this time.
Continue looking if they aren’t. You want someone who specializes in working with business owners and recognizes that not every owner has the financial means to become bonded all at once.