Getting a Surety Bond is Harder Than it Should Be
Posted by autobroker on Jun 24, 2009
I found this article and thought it brought great insight about how getting bonds has become harder to get.
Sometimes getting a bond is harder than it should be. You search for days sometimes months trying to find a bonding agency that can help you. If you have Alt-A credit many bonding companies will not be willing to extend surety credit. Most Surety Company requirements require a minimum of a 660 credit score to extend credit. Since surety companies have a no loss philosophy. What I meant by that is if you get a claim on you bond you have to pay the surety back. So surety companies are weary on write bonds for clients at a financial disadvantage The surety most of the time wants to see businesses with a high credit rating as well as stable and strong financial. With the way the economy currently is it is harder for a business to obtain their license bond, when a surety does not want to bond a company that is showing a loss.
Surety companies have been reluctant on writing larger performance bonds since these bonds pose the biggest risk. With contractors not having the ability to borrow against their home. It has made it harder to increase their working capital to fund larger projects.
Contractors have been suffering the most. Now the SBA has expanded its bonding programs to help accommodate contractors with their growing needs. The SBA is now bonding contractors with higher limits. Contracts that need Performance and payment bonds are now able to perform larger federal jobs. This has brought relief to many contractors because surety bonding companies have not been willing to write larger bonds.
What are Surety Bonds? Can you get bonding if you have bad credit? If you want to know these questions and learn the Surety Bond process visit our blog.
Article Source: http://EzineArticles.com/?expert=Robert_Jake
Differences Between Surety Bonds and Insurance
Posted by autobroker on Jun 24, 2009
Surety Bonds are for consumer protection that coincides with professional services and licenses. Surety bonds are one of the oldest forms of insurance dating back thousands of years. Surety bonds are more of a reverse insurance policy protecting the consumer not the principal of the surety bond.
Commercial Insurance protects your business from being sued. Most common Commercial Insurance such as general liability protects your business for injury or property damage such as a fire or a customer that slips on a wet floor. There are many different forms of commercial insurance that can protect your company; also there are many endorsements you can purchase to give you and your business peace of mind. With Surety bonds there are no special endorsements that you can buy to protect your business. The surety bond does not protect you or your company but the consumer or the obligee in case of fraud or whatever underlining statue referenced in the surety bond form.
Insurance indemnifies the policy holder and protects your business in the event of insurance claim. A good example of this is D & O Insurance. D & O Insurance protects the personal assets as well as your spouse’s assets from lawsuits steaming from wrongful termination, sexual harassment, discrimination based on sex, age race or age. There are no Surety bonds that would cover this.
Surety Bonds indemnify the surety company and protects the consumer or oblige in the event of a claim. In Insurance you pay an deductible and the insurance company covers the rest of the claim up to the policy limits. Also you usually have the option to obtain a higher deducible to obtain a lower premium for your policy. With Surety bonds you do not have any option to have a lower or higher deductible to lower or raise the premium; there are no deductibles. You must also pay the Surety Company back for any claim that was spent by the surety company.
Surety bonds a required by law to obtain a license or to perform government contracts. The government requires performance bond to guarantee that the money for a project will be completed and tax payers will protected. While some Commercial insurance products are required by law such as general liability or workmen’s comp, they are not usually required to obtain a license.
Insurance policies limits can be lowered or raised where surety bond amounts are predetermined by the State or Federal Government and the principal cannot change them. Bonds are underwritten similar to a loan where insurance policies are not. Indemnification for insurance policies restore the principal to the financial condition they where in before the time of the loss. Indemnification for the insured in surety bonds restore the surety company to the financial position it was once in before the loss occurred.
I hope this has clarified the vast differences of these two different forms of insurance.
Surety Bond information is hard to come by I hope this has help you with the Surety Bond Process. You can learn more about Insurance and Surety Bond news with future articles
Article Source: http://EzineArticles.com/?expert=Robert_Jake
Upcoming Surety bonding requirements this year
Posted by autobroker on Jun 24, 2009
Upcoming Surety bonding requirements this year. This year we will see a lot more new surety bonding requirements from a variety of obligee’s. The reason why this will occur is because of the influx of claims from business defrauding the public. As businesses are facing closure desperate companies are violating the laws to stay open.
More restrictions as well as new bonds have been on the rise. Not to mention higher bond amounts as well as changing of the bond form languages for certain bonds. This has caused many businesses to close their doors do to bonds that were once considered a soft bond form to a hard to place bond.
New bonds as well as higher bond amounts
California last month tried to increase the bond amount required for car dealers from $50,000 to $100,000 the law was struck down but motion to reevaluate the new bill was granted.
So far this year a $50,000 Medicaid bond has been required for DMEPOS suppliers. The Surety bond is being required to hopefully combat fraud performed by DMEPOS suppliers. Even Suppliers of durable medical equipment such as prosthetics, orthodontist must obtain the bond.
Also this year a $25,000 MVD bond has been required for Indiana dealers. I have not seen a surety bond form as of yet but I will keep you posted. Texas MVD bonds have increased from $25,000 to $50,000 as well; the bond will still remain a two year term. Tennessee has also followed the trend by raising there bonds for auto dealers from $25,000 to $50,000 it is also a two year bond. Currently there are talks of increasing contractor license bonds for California as well.
Surety Bond types can be confusing you can learn more about Surety Bonds at our blog
Article Source: http://EzineArticles.com/?expert=John_Bows
Offering Surety bonds fast
Posted by admin on Jun 16, 2009
Many times when you need a surety bond you need it fast. A few years ago before technology changed the industry it could take weeks to get a bond. Now with automated bond forms and applications getting surety bonds have never been faster or easier. With the ability of typing surety bonds on a computer via pdf instead of a typewriter has made getting a bond issued done in minutes instead of hours. Underwriting is now preformed with in minutes with certain types of bonds of course. We understand that the surety bond may be your last step in obtaining your license and we want to help get into business. The majority of license and permit bonds we underwrite, can be approved with in the same day.Tips on How to Obtain a Surety Bond
Posted by Rick on Apr 3, 2009
Over the course of the last two years the surety Bond Industry has under gone dramatic changes. Due to increasing claims caused from suffering industries such as the car industry and the mortgage industry Surety Bonding Companies have to tighten their belts. Bonding companies are now enforcing tougher requirements and are increasing rates to compensate for their losses. Due to underwriting changes many teetering clients that had preferred rates will now be placed in the subprime market. Many established companies that had a preferred rate last year cannot qualify this year for same price or their rate has gone up.
New businesses are suffering the most because preferred rates are now only for established companies. Collateral is also coming to play with many surety companies requiring it for the majority of the surety bonds they write for new business. With that said here are a few tips to help you obtain a surety bond without collateral and at a reasonable rate.
Tip one: if you are a new business and you do not have a business financial prepared create a start up business financial and create a business plan as well. A start up business financial or a business plan with some companies may help you with the rate by one or two points.
Tip two: send a resume Surety companies what to see experience. Showing experience may help you get out of subprime pricing.
Tip three: If your credit is a little shaky or your financial s are not up to pair apply with a co-signer. When applying with a co-signer make sure that the cosigner can qualify. Here are a few qualifications for co-signers.
Clean credit with no collections or delinquencies a 650 credit score or higher owning property and real estate. The real estate does not need to be owned free in clear. Keep in mind if you have a co-signer you will not be able to obtain preferred pricing but it may help you get a price break.
Tip four: Use a surety bond broker your local insurance agent may not have the markets to help you since surety bonding is a specialty field. Many surety bond agents have programs that can obtain surety bonds for new business with no collateral.
Surety Bond types can be confusing you can learn more I have been writing Surety Bonds for over 10 years
Article Source: http://EzineArticles.com/?expert=John_Bows
Surety Bond program doubled
Posted by Rick on Apr 1, 2009
Surety Bond program doubled
The SBA surety bond program has now doubled their bonding limits to cover surety bonds up to $2,000,000.
If a company can qualify for a $2,000,000 they should be able to qualify for normal markets. Does any one know the need for these programs?
Surety Bonds with the SBA
Posted by Rick on Mar 30, 2009
Surety bonds for contractors written though the SBA’s program has now increased from a $2,000,000 limit to $5,000,000 limit. The SBA has also increased the surety bond size for Federal jobs up to $10,000,000
The SBA wil back surety companies that are pratestpating in the SBA programs for 70% to 90% of a loss that might occure.
MVD Bond | Surety Bond
Posted by Rick on Aug 6, 2008
Do you know if MVD Bonds can be written under the instant issue surety bond program ?
How Much Does a Surety Bond Cost?
Posted by admin on Jul 31, 2008
How Much Does a Surety Bond Cost?
By John Bows
How Much Does a Surety Bond Cost? We must first understand what a surety bond does as well as the factors that are involved that will determine the rate as well as obtaining a surety bond approval. The surety company will evaluate your credit, experience, and financials. The process is very similar to apply for a business loan. Rates vary on a multitude of conditions such as which state is it for, what type of surety bond is needed, what is the financial outlook for the company or individual, how much experience does the business have and of course, which surety company is writing it.
Most companies are looking for a credit score above a 670 with no public records, collections, or slow pays. They also review your business financials to make sure that your company has a positive net income and worth. The surety company requires that your financial equity be at least five times the bond amount. Therefore, if you are applying for a $50,000 Surety bond the surety is looking for a net worth above $200,000. Keep in mind this is different for each bond type and state because some types of bonds have a higher loss ratio than other types of bonds. Remember that you are indemnifying the surety so the surety wants to make sure you are able to pay a claim if one occurs. If you meet these requirements and the type of surety bond is not considered hazardous such as a financial guarantee than you should be able to qualify for a preferred rate of 1% to 3% of the surety bond amount. Keep in mind that each surety has a minimum premium for a bond, which is usually $150.00 to $250.00, but you only run into these scenarios if your bond amount is under $25,000. So using a $25,000 surety bond as an example and the rate was at a 3% the cost would be $750.00.
Unfortunately, not every person or company can meet the surety requirements for preferred rates or even qualify for bonding, especially with the surety bond market tightening due to an influx of claims. Many Surety Companies will require collateral or simply decline your submission if you cannot qualify. Fortunately, there are still programs that will not decline your bond due to credit or other conditions they will just charge a higher rate.
Here is how is how it works if your business does not qualify for normal bonding the rate can be anywhere between 4% to 25% rate this is only for License and permit bonds. So if you where applying for a $100,000 Surety bond and your credit, financials or experience do not meet the surety companies requirements instead of declining you the rate will be higher for an example if you where approved at a 5% rate the cost would be $5,000.00 with no collateral. You may say to yourself well I would rather post the money with the state instead of paying a little more for my surety bond, you can of course do that but keep this in mind the state will not release your collateral until the statue of limitations is up. Therefore, after your bond is no longer needed or you are no longer in business the state will not release the collateral for several years.
If you want to learn more about a specific Surety bond type you can always visit us at our website http://www.integritybonds.com for more information.
Article Source: http://EzineArticles.com/?expert=John_Bows
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Surety Bond Markets
Posted by admin on Jul 25, 2008
Since surety bonds are based upon financial strength and credit it can be challenging to obtain a surety bond approval. I stumbled upon Worldwide Insurance Specialists, Inc a few Years ago and found thier hard to place surety bond program to be one of the beest. I have been a surety bond agent for 10 years and have not seen a more flexable program.
