All posts by M L

July 21, 2016

Guardianship Bonds – Apply Now

A guardianship bond is when a court appoints a person (the guardian) to take care of the affairs of another person (known as the ward). The guardian is entrusted with taking care of the ward’s personal and financial affairs. Sadly, this does not always happen.  One sometimes hears of cases where a guardian abuses their power at the detriment to the ward. A guardianship bond is usually a requirement when the court determines guardianship. Although each guardianship bond varies it is an invaluable reassurance to the family of the ward. It helps to deter those who may seek to be a guardian for their own financial benefit. A guardianship bond acts as a form of assurance that the guardian will fulfill their lawful duties in the best interest of the ward. Like other surety bonds, a guardianship bond is a three party contract between the courts, the guardian and the surety. If a ward suffers at the hands of the guardian, the guardianship bond will cover the damages and then will demand compensation from the guardian to recoup the surety’s money. Here are five times where a guardianship bond can be a lifesaver: 1. Incompetence: Being a guardian can be...

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July 18, 2016

What You Need to Know About Surety Bond Insurance

As many people may know, a surety bond is a written agreement guaranteeing the satisfactory performance of a contractual obligation. This agreement provides for monetary compensation  in the event that a principal fails to accomplish the job per specifications in the bond. There are many who may confuse surety bonds with insurances. They may think that their purpose are alike, but this is not the case. Here’s what you need to know about surety bond insurance. There are three parties in a surety bond contract are: The Principal – the party that purchases the bond The Obligee – the party that requires the bond The Surety – the party that issues the bond Do I need a surety bond? Do I need a surety bond?  When do I need it and what are the risks if I don’t get one?  These are questions which you may have pondered.  Well, have no fear!  Below we have highlighted some situations where you may need a surety bond. Licensing: Many industries require you to get a surety bond. This ensures that the applicant adheres to specific industry regulations. If they do not adhere to, then the someone may file a claim. Specific to...

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July 15, 2016

Does Buying a Surety Bond Really Matter for Your Business?

Although surety bonds are becoming more common in society, many people are not familiar with them. Yet, surety bonds are an important safeguard and/or necessity for many business owners, companies, federal and state government agencies. Bonds can play a very crucial role in business. They can protect a business and create trust when dealing with prospective clients. Bonds are a legal requirement by states for various industries. What is a surety bond? A surety bond is an agreement between three parties: the principal, surety and obligee. The surety provides a financial guarantee to the obligee (i.e. a government agency) that the principal (business owner) will fulfill any contractual obligations. The purpose of a surety bond is to guarantee a principal’s integrity, performance and financial responsibility. The main purpose of a surety bond is to make sure that the obligee will perform their contractual obligations. It also guarantees compliance with a law or contract For instance, a small contractor renovating a living room, does not finish the job according to the contract.  Or maybe they fail to abide by the state laws and regulations.  In both cases, they can have a claim filed against them by the consumer, asking or demanding...

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July 14, 2016

Surety Bond Claim Process – Facts & Tips

It is important to know how to avoid claims in order to protect your business. Therefore, in order to avoid claims, especially false claims, it is important to work with a surety bond producer who is knowledgeable and competent.  To review, a claim is when a client makes a formal accusation against due to their assertion of a violation of the contract.  In order to avoid claims, you need to be certain, first, that you fulfill your contractual obligations.  But, unfortunately, even if you fulfill your contractual obligations, it doesn’t mean you are safe against a false claim.  Working with a surety bond producer who will protect you can be a comforting feeling during a stressful false claim. A surety bond, although necessary, doesn’t protect you from claims.  Instead, it protects the public from you not fulfilling your contractual obligations.  In order to avoid claims, it is important to follow government rules, fulfill all contractual agreements, document everything. As always, if a dispute arises, try to resolve it with the complainant first. If a claim is filed, both sides will argue their case in front of the bonding company.  If the bonding company agrees in your favor, they will help...

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July 6, 2016

Are all Surety Bond Producers the Same?

Choosing a surety bond producer that is competent and knowledgeable could save your business a good amount of money.  In past Facebook posts, we’ve briefly mentioned the benefits of choosing a surety bond producer who is knowledgeable and competent in order to make sure that you get the correct bond with all the t’s crossed and i’s dotted so that you have the best chance at winning a bid.  But there is also another reason. What to look for in a Surety Bond Producer With surety bonds, you are the one that pays the claim if someone files against you.  The surety bond is there as a three party contract.  But what happens if your surety bond doesn’t fully protect you, and you have to pay for a false claim or pay more than is necessary?  This is where it is important to make sure that the surety bond producer you choose to do business with has years of experience and knows the field, so that you are protected as well. With some larger surety bond producer companies, you are just a numbered file in a filing cabinet. But at Surety Bond Professionals, we pride ourselves on customer service and...

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June 28, 2016

Surety Bonds Vs Subcontractor Default Insurance

We started a conversation on our Facebook page the other day about the differences between surety bonds and subcontractor default insurance.  We wanted to delve in a little more to help you decide if a subcontractor default insurance (SDI) or surety bond is the best way to protect your business. SDIs have become popular since 1996 as a way for contractors to manage the risk of working with subcontractors.  Basically, through SDIs, the contractor is accepts and manage risks that occur if a subcontractor defaults on their contractual obligations. The trade off is, that the benefits of a performance or payment bond are not applicable in SDIs. Below we break down the different benefits and risks. One of the differences between surety bonds and SDIs  are that there are specific regulations in the surety bond industry, which the state insurance department enforces.     Bond forms are also standard (although are negotiable) in a surety bond. Whereas,  the insurance company mandates which form the parties will use with an SDI.  A surety bond also has the benefit of protecting all three parties (obligee, principal and surety).  An SDI is a two party contract between the insurer and principal. The premium is...

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June 20, 2016

The Importance of a Work In Process Schedule for the Contracting Company and the Surety Company

A Work in Process schedule (WIP) helps contractors document the progress of their project.  A WIP also helps the surety company to evaluate the progress of the project as well.  A well-documented WIP can help the contracting company earn future approval for surety bonds. In a general WIP, some of the things documented are the contract price, billings to date, costs incurred to date, estimated completion cost and estimated gross profit. These help the contractor show that they are completing the project on time and without additional costs. The reasons a WIP is important for a surety company is that it helps to monitor profitability, any errors and profit fade and gains that may happen.  The surety company is also able to evaluate billing practices of the contracting company.  A WIP also helps to back up the contractor’s financial strength on the project. It is important to have Certified Public Accountant (CPA) organize the contractor’s financial records, to provide to the surety company. Summary: A WIP is important for both the contractor to stay on schedule and document any shortcomings.  It is important also for the surety company to monitor and evaluate progress and any discrepancies. A proficient WIP can help...

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June 15, 2016

Warning Signs that may Deter your Bond being Processed

Many contractors find that the surety bond process can be complex. But, having a competent and knowledgeable surety bond producer is the first step to making sure your project will get underway. By answering the following questions, a contractor may be able to determine if there may be a delay in approval. Questions to Consider: 1. Is there already a claim open with the current surety? If another application has not yet been approved, that may be a warning sign that there is a reason for the delay. The best way to correct this is to (a) resolve any issues with the surety bond claim and (b) work with the surety bond producer, if both parties cannot resolve the issue on their own. 2. Is the project within the realm of the contractor’s expertise? If not, the underwriter may worry that the lack of  understanding of the project may delay it.  The best way to remedy this is to explain why the contractor is bidding on the project, how the contractor will avoid and/or solve any potential risks and why the contractor is seeking this particular project. 3. Is the project outside of the home turf? If the contractor is bidding on a...

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financial guarantee bond

June 5, 2016

Financial Guarantee Bond – Apply Now

A financial guarantee bond can be difficult for an applicant to obtain approval for.  But, with the right expertise from a surety bond producer, it can be done with very little hassle. These bonds encompass a large number of different types of bonds where the only remedy is straight financial payment. Learn more below, or request a quote today. What Is A Financial Guarantee Bond? A financial bond is an indemnity bond which cannot be cancelled.  In the case that the principal cannot perform their contractual obligations, it ensures that they will reimburse the obligee for the violation. Some examples of a financial guarantee bond are tax bonds, Medicare and Medicaid bonds. Because of the complexity of these bonds, they can be extremely hazardous. Therefore, they are carefully underwritten. Generally, the insurance company guarantees that the business bonded pays the principal and interest according to the contractual agreement or promissory note.  Due to the complexity of financial guarantee bonds, it is a customary recommendation that the surety producer familiarizes themselves with the specific requirements.   Factors Impacting Cost A commercial bond application: This provides general information and may help the surety bond producer determine the bond amount, who is asking for...

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