Real live case:
A new applicant called us today regarding a P&P bond they need for a school district project.
I asked: “How did you acquire this contract? (public work is typically bonded) Was a bid bond used? Answer: “Yes.”
He went on to explain that the bid bond provider wants his wife’s personal indemnity, which they don’t want to give. (Apparently this was not discussed in advance!) He owns the company. “She doesn’t have anything to do with it.” I assured him full indemnity is normal, and we typically require it, too.
Challenge Question: What’s the next step to help this applicant?
- The client could go back to the bid bond provider and offer them collateral in lieu of full indemnity.
- They could offer to sign a “Non-transfer Agreement” which prohibits moving assets between the indemnitor and the non-indemnitor.
- If they want us to consider, we could look at those two options.
- They could try a new agent and underwriter and may get a different response.
- They could offer the school district cash collateral or an Irrevoccable Letter of Credit issued by a commercial bank in lieu of the P&P bond.
- They could also offer the school district a Tripartite Agreement – which is a form of funds control.
At FIA Surety, you don’t get knee-jerk reactions. You get thoughtful responses, promptly given. We’re proud of the fact that we’ve been a highly successful “surety only” market for over 40 years. We’ve seen it all – twice!
Put our vast expertise to work and solve your client’s problems.
FIA Surety is First Indemnity of America Insurance Company, a carrier providing A rated, T-listed bonds in all states!