Secrets of Bonding

179. De-Mystify Subdivision Bonds

FIA Surety is a strong niche player that specializes in Site and Subdivision Bonds – but you may not be. In fact, if “surety” is a small slice of “bonding”, Subdivision is an even smaller part (a subdivision?) of surety bonds. Cool bonding joke?

Let’s take some of the mystery out of this subject:

  • Q. Who may require one of these bonds? A. Any commercial property owner who modifies or adds to their building or property, strip mall developers, home builders, land developers.
  • Q. Are these the same as a Performance Bond? A. They do guarantee that construction will be completed, but on these bonds, the principal (bond applicant) is paying for the work. Other differences: There is no construction contract with the obligee, and no required completion date.
  • Q. What is the underwriting approach?
    • A questionnaire and financial statements are required
    • There may also be mandatory bond forms from the obligee
    • The planning board approval for the project is reviewed
    • We also need the municipal engineer’s list of “public improvements” that will be covered by the bond
    • Since the work is self-financed, we need evidence of how the client will fund the work
    • Also need to know who will actually perform the construction

That’s pretty much “it!” Sounds easy, right? Why do most underwriters avoid these bonds? We don’t! We have written them energetically for more than 40 years!

When you need one, call the experts.

Watch Site and Subdivision Bond Video

Steve Golia
First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

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178. Surety Pop Quiz (Are you smarter than the average bear?)

When it comes to surety bonds, you know your way around a power of attorney. But are you smarter than the average bear?

Here goes. Answers at the end. No peeking.

  1. “P&P Bond” means: A) Preserve and Protection Bond B) Performance and Premium Bond C) Performance and Payment Bond
  2. The Obligee: A) Is the beneficiary of the bond B) Is the Owner of the bond C) Applies for the bond
  3. Penal Sum is the: A) Punishment for late completion B) A famous soup made in Asia C) The bond amount
  4. The party whose actions the bond concerns: A) Principle B) Principal C) Prince Epal
  5. Dual Obligee means: A) Bond has multiple beneficiaries B) The Obligees duel to determine outcome of the bond claim C) The bond has dual “exhaust” clauses
  6. Collateral: A) Is frothy and collects around the rim B) Is lateral to the collar C) Security deposit held by the surety
  7. The formal name of the T-List: A) Circular 570 B) Circular 750 C) Circular 007
  8. A legitimate Payment Bond claimant: A) All painters B) Local state government C) Laborer on the bonded project
  9. Overrun: A) When the contractor has too much work on hand B) When the contract price is increased C) When asphalt paving is applied too thick
  10. Example of an Obligee default: A) Failure to sign the bond B) Failure to pay as required in the contract C) Failure to cap the liquidated damage clause in the surety consent

Bonus Question: Can an insurance agent make a Payment Bond claim for the uncollected surety premium? A) DUH!!! B) I dunno C) What?!

All right, here are the answers.

  1. A) Performance and Payment Bond. I hope you got that one!
  2. B) The Obligee is the beneficiary of the bond
  3. C) Penal sum is the bond amount. (But that soup is awesome!)
  4. B) The party whose actions the bond concerns is the Principal
  5. A) Dual Obligee bonds have multiple beneficiaries
  6. C) Collateral is a security deposit held by the surety
  7. A) The T-List (Treasury Department List of approved sureties) is Circular 570
  8. C) A legitimate Payment Bond claimant is a laborer on the bonded project
  9. B) Overrun is an increase in the contract price
  10. B) Example of an Obligee default is the failure to pay as required in the contract

Bonus Question: NO! Payment bonds cover suppliers of labor and material. The original name for these instruments is a “Labor and Materialmen’s Payment Bond.” Insurance premiums are not covered.

Want more Yogi? Click!

Watch Site and Subdivision Bond Video Click!

First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

“Follow” this BLOG in the upper right hand corner for more exciting surety bond stuff!

175. Surety: Go Deeper

If you attended our Free CE course called “Surety Bonds 101” you know that bonds are not insurance.

You may recall some of the differences: Bonds have three parties involved not two, there is no risk transfer, the bond may be non-cancellable, etc.

A significant part of surety underwriting is based on trust, trust that is the product of a favorable rapport between the producer and underwriter. This simply means, the more bonds you write with a specific underwriter, the more you will be able to write – because a foundation of trust has been created. It is important to the underwriter. Therefore, it must be important to the producer.

How to Go Deeper

The agent’s marketing effort should be focused on one underwriter, selected based on the company’s appetite, the underwriters preferences, and any other determining factors. If #1 doesn’t work out, you move on to #2.

What you don’t want to do is spread the file all over the market. Doing so erodes your rapport with every underwriter. It sends this message, “You people are all the same to me. I don’t offer any market loyalty. I’m not interested in building a relationship…” Get it?

Go Deeper. Build a rapport with your best markets. Assure them “This is yours to write!” and watch them rise to the occasion. That’s what WE do!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

Site and Subdivision Bond Specialists

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177. Credit Based Surety Apps: Q&A

Q. WHAT IS a credit based surety app?

A. These are short applications bonding companies use for bid and performance bonds that meet certain requirements.

Q. What are the typical criteria?

A. Contracts that are eligible for this approach are usually “plain vanilla:” Not too long or complicated, not too big, normal work for the client, in a favorable location, etc.

Q. What’s the advantage of using such apps?

A. The underwriting process is based on the quality of the applicant’s personal credit report, plus a few key underwriting questions. This method avoids having to gather all the normal bonding stuff.

Q. Are all these “quick” apps the same?

A. To a degree, yes. However, will the processing be both quick and easy? The program is not beneficial if you can’t get an answer when you need it…

FIA Surety’s FASTAPP includes a service standard: Submit our completed short form app and get a SAME DAY RESPONSE! How can you lose? And with a fast response, you’ll probably win the business!

Get it: FASTAPP by FIA Surety

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

P.S. Check out our upcoming Free CE schedule here!

Follow this BLOG in the upper right hand corner for more cool bond stuff

Surety: Wants It NOW!

All right, calm down…

You need a Bid or Performance Bond and you made a mistake. You used the “Quick ‘n EZ” bond app, but you didn’t know it is the “Quick ‘n EZ and SLOWbond app!

You need our same day service promise. Send in a completed FIA FASTAPP and get a same day response. We Promise!

So dry your tears, click for the app and let’s go!

Use the FIA Surety FASTAPP for Bid and Performance Bonds up to $500,000.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

P.S. Check out our upcoming Free CE schedule here!

Follow this BLOG in the upper right hand corner for more cool bond stuff

Surety: Hollow Promises

“Easy” bonding apps: They promise to be great… But they are missing one thing: Time standards. WHEN will you get an answer? That’s the missing piece.

OK, here come the fixers. Your best problem solving surety now goes on record with a same day service standard. That’s right! Send in a completed FIA Surety FASTAPP and you can expect a SAME DAY RESPONSE.

There. We said it.

Get our FASTAPP for contract bonds up to $500,000 Click!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

P.S. Check out our upcoming Free CE schedule here!

Follow this BLOG in the upper right hand corner for more cool bond stuff

Cyber Attack Cure

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Cyber Attack giving you a sick tummy? Can’t get a bond you desperately need?

Here’s the cure: FIA Surety is ready to go. Call us right now for Site and Subdivision Bonds. We love ’em!

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
Visit us: www.fiagroup.com
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN, FL, GA, AL, OK, TX

Subdivision Bond Question

Why would you make your clients pay 1.9 or 2+% for Subdivision Bonds?!!

FIA Surety is your go-to market for Site & Subdivision bonds.

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
Visit us: www.fiasurety.com
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Big News from the FIA Surety Free CE Program

The FIA Surety School is happy to announce that we have just added Virginia to our list of accredited states! Now VA resident agents can participate in our Free CE program. If you missed our 3/1/21 webinar on Site and Subdivision bonds (our specialty!), here are a few of the comments:

* Enjoyed the class. Very informative.
* Thanks for providing a better understanding of this class of bond.
* Thank you for all of the information. Please send me an email for the next course.

In addition to adding Virginia, we also have a new 3 credit course specifically for NC resident agents. Upcoming webinar dates are 4/1/21, 5/3/21 and 5/12/21. For more details and to register, visit the Free CE blog.

FIA has been writing Site & Subdivision bonds for Home Builders and Developers for over 40 years.  Call us with your next one!

FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX

Free CE Webinar: 3/1/21

There’s still time to join our FREE Continuing Education webinar on 3/1/21. Subject is “Understanding Site and Subdivision Bonds Webinar” (3 CE credits)

You attend from your home or office computer (Zoom meeting) Free credits, no exam!

Register here: https://fiasurety.blog/2020/08/16/free-ce/

Forward this to your colleagues.

Approved CE provider in: FL, GA, NC, NJ, PA, SC, TN, TX

FIA Surety / First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN,  FL, GA, AL, OK, TX