surety secrets

Secrets of Bonding #134: How to AVOID the T-List

Steve Golia1 Comment

cat-hiding-in-snowFamiliar with this?  “T-List” is the bond vernacular for the Treasury List or more formally: Circular 570. The document is produced annually and maintained by the Bureau of Fiscal Service, US Department of Treasury.  Why do some contractors want to avoid it?

Their web page says it is the Treasury’s “Listing of Certified Companies”  https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570_a-z.htm

The purpose of the list is to establish a pool of surety companies that the government finds acceptable to bond federal projects.  Having this group established in advance avoids the need for federal contracting officers to vet the bonding company during each contract award process.  It helps speed things up except for one problem: Not all bonding companies are on the list.

Why is this?  Does it mean they are not strong or ethical?  Does it mean their bonds are no good?  Not necessarily.

Remember, when it comes to corporate sureties, they are subject to state regulation even if they are not on the T-List. So not being on the list could mean:

  • The surety has applied for approval and is still being processed
  • They applied and were declined or deferred to a future date.
  • They have chosen to not apply to be on the list.

Point is – it does necessarily mean anything bad.

For some contractors, they may have a surety relationship in place, but when they go after a federal job, they learn that their surety is not T-Listed.  Must they avoid federal work or find a new surety that is on the approved list?

dog-hiding-in-a-drawerNo…. It turns out there are situations in which the federal government does not require a T-Listed surety.

For construction contracts from $35,000 to $150,000, the government can accept alternative methods of payment protection other than a surety bond. These are: 

  • Irrevocable Letter of Credit issued by a commercial bank
  • Tripartite Agreement managed by a federally insured bank
  • Certificate of Deposit
  • Deposit of acceptable securities (Reference F.A.R. section 28.102-1)

For work performed in a foreign country, the bond can be waived entirely if the contracting officer concludes it is impracticable for the contractor to provide a surety bond. (Reference F.A.R. section 28.102-1)

Individual Surety bonds are an alternative to corporate sureties and they are never on the T-List. (Reference F.A.R. section 28.201)

Other forms of security may be used such as

  • United States Bonds or notes
  • Certified or Cashier’s Checks
  • Bank Drafts
  • Money Orders
  • Currency
  • Irrevocable Letter of Credit

Conclusionhiding

Being T-Listed is not always mandatory for federal contracts, although it is in the majority of cases.  Nevertheless, it is interesting to note that there are a series of exceptions, and these are always in play.

Armed with this info, contractors can go after federal work while avoiding the need for a T-Listed surety, or (heaven forbid!) any surety at all.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision and Contract Surety Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

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Secrets of Bonding #132: Inside the Underwriters Skull

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We’re going on a journey.  We will crawl inside the surety bond underwriter’s skull and see what’s in there: Maybe not much.

To succeed in acquiring bonds, it is helpful to understand the process and motivation of the decision makers.  Here we go.

Agency vs. Bonding Company

When new clients call us to get their bond account resolved, we always ask “Do you currently have a bonding company?”  The answer is often something like “Yes! The Acme Insurance Agency.”

So the first thing to understand is the difference between the agent (or agency) and the bonding company (aka the surety, the carrier, the company). Typically, the agent (and agency) is your local retail salesperson.  Their job is to find new prospective clients, develop their info, analyze and submit it to the underwriters for review, and provide ongoing customer service. They normally are paid by commission and do not hold any of the risk on the bonds.

The Surety (bonding company, the carrier) holds the risk.  They collect the bond premium.  Their employee, the underwriter, is the decision maker who determines if the bond will be approved, and on what terms. 

Now that we have identified who the decision-maker is, let’s talk about process and motivation.

The Process – Underwriting Authorityskull

In order to assure a consistent and controlled decision-making process, bonding companies issue Letters of Authority to each underwriter.  These instructions cover two areas. 

  • #1 prohibited transactions. Don’t do any of this stuff.  It may include types of bonds and different scenarios that are unsupported by reinsurance, or are incompatible with the company’s risk appetite.
  • #2 transaction size. This covers the dollar value of transactions.  It may say “You can issue the following type of bond, up to this maximum amount $_______.”

Motivation

Underwriters are paid a salary and in many cases, a production bonus.  The bonus is based on the volume of profitable business they produce.  They are expected to operate faithfully within the company’s underwriting guidelines.  Annual production goals are set with a reward if they are exceeded.

If you have a feel for it now, let’s put on our underwriter hats and look at some situations.  As an underwriter, will you move these to the top of the stack?

Situation 1: This new applicant does not normally need performance bonds.  In fact, after three years in business this is their first one.  You are told “this shouldn’t be a problem” because the contract / bond amount is only $15,000.

Situation 2: Maintenance Bond request on a completed contract.  A “no brainer?”   The performance bond was issued by another surety, but the client says they don’t want to use them for the Maintenance Bond because of their slow service.

Situation 3: The government is offering a computer services contract.  The vendor must provide a performance bond.  The contract has two optional one-year extensions at the sole discretion of the government.  The surety must file notice of cancellation 30 days prior to anniversary in order to get off the risk.  Failure to bond the extension (with a new surety) can result in a claim against the expiring bond.

Love any of these?  We don’t either.  Why are they undesirable to the underwriter?

Remember the basics:  Underwriters are looking for profitable transactions they can process efficiently.  Case #1 is simply not rewarding enough.  Too hard to set up a new file just to write one very small bond, and maybe that’s the last one for the next three years.

#2, looks like there is a complicated underwriting situation.  Could be a performance bond claim, or bad financial info that is causing the incumbent surety to back away.  People don’t change bonding companies just for fun.

#3, underwriters cannot proceed if their exposure is undefined. Since the potential bond term is undefined (and beyond the underwriter’s control), it would be impossible to comply with the underwriting authority.

Conclusion

Underwriters do not embrace all transactions equally.  So how do get your bonds approved?

  1. Start with a conversation. This can give you an idea of how to proceed efficiently: “Here’s what I got.  Can you help me?”
  2. Good file accessibility: Make the info easy to process.  Does the underwriter want pdfs emailed for review?  Then don’t send a paper file or one big jpg (a picture file).
  3. Proper forms: Does the underwriter require their own application?  Use it!  Answer ALL the questions.
  4. Be Cooperative: “Are you sure you don’t have that already? We sent it on Monday.” That always amazed me. If the underwriter requests info, don’t ask them to justify that they need it.  Provide it – and more than once if necessary.

Remember, even if the process is difficult, underwriters must approve business to remain viable.  Make your bond easy to process and easy to approve. Make it the file they want to work on next.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision and Contract Surety Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

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Secrets of Bonding # 131: Maintenance Bonds – Breezy Free & Easy

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Free surety bonds.  Is there anything better? Actually we can think of a couple of things right off BUT…  are they good?  Sure they are.  

Everybody likes free stuff.  Trouble is, they’re not always breezy free or easy.  Sometimes they’re a huge P.I.A.  So let’s get into maintenance bonds and learn the issues.

The most common Maintenance Bond situation is a bonded public or private contract.  The specification stipulates there must be a 100% (of the contract amount) Performance and Payment Bond plus a Maintenance Bond, which is often for a lesser amount, maybe 20% of the contract price.  The maintenance bond covers the completed work for defective materials and workmanship, for a specified period of time.

The P&P bond is issued when the project commences, and the Maintenance Bond comes when the completed work is accepted.  It is common for the project owner (obligee) to write an acceptance letter regarding the proper completion of the contract, and stating that the Maintenance Bond must now be issued.

free-easyFor the surety, this bond is an easy decision.  They already got paid for the P&P bond. They already faced the risk of claim due to faulty workmanship or materials.  Now the contractor (Principal) will pay an additional premium to obtain another bond on the same work. 

In some cases the surety doesn’t even charge for this bond following their P&P obligation – breezy free and easy!  If they do charge, the rate may be less than for a P&P bond. So when is it not breezy free and easy… and why?

Timing

Maintenance bonds are normally required after the contract has been accepted (work completed). However, in some cases, the owner requires issuance concurrently – at the inception of the project. This is difficult for the surety to support because the approval of maintenance bonds may be relatively easy, but it is not automatic.  The surety must decide if they want to accept the risk associated with the maintenance obligation. In part, this is predicated on the smooth performance / completion of the contract. If the job was fraught with problems and difficult to complete, they may not want to support such an obligation.

Requiring the underwriter to issue the bond at the beginning takes away the opportunity to make an informed decision. 

General Underwriting Concerns

There is a time factor involved in each of these bonds. The surety must be confident that for the one or two-year period, the principal will be willing and able to respond to any call-backs (things that crack, malfunction, etc.)

If the applicant has recently deteriorated, such as declining credit scores or a poor financial statement, the underwriter may refuse to support their request.

Term

The duration of the maintenance obligation can present an underwriting issue. A one-year obligation is normal.  Two years may be possible.

What about five years or ten?  Probably not.

No P&P Bond

Sometimes a Maintenance Bond is requested, but there was no Performance Bond.  Or, another surety may have issued the P&P bond.

If there was another surety involved in the project, it will be very difficult to gain a new underwriter’s support – the thought being “this risk belongs to anther surety.”

If there was no P&P bond, the maintenance bond underwriter will require an Obligee’s Contract Status Report. This is the obligees written statement that the contract has been completed in a satisfactory manner, and related bills paid. A clean bill of health is needed to gain the underwriters support.

Conclusion

You wont get a maintenance request on every project.  But when you do, it may be very easy and cheap – but not always.  Now you know why.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision and Contract Surety Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

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Secrets of Bonding #123: Who Was Edward Aloysius Murphy, Jr. (& Why Contractors Should Care)

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(January 11, 1918 – July 17, 1990) An American aerospace engineer who worked on safety-critical systems for the U.S. Air Force. He is best known for his namesake Murphy’s Law, which  states, “Anything that can go wrong will go wrong.”  Murphy regarded the law as crystallizing a key principle of defensive design, in which one should always assume worst-case scenarios.Murphys_Law

Keeping Major Murphy’s principle in mind, what are the critical steps contractors can take to get their projects off on the right foot, and bring them to a successful conclusion – while keeping Murphy’s Law out of the equation?

The first key to having a successful contract is to have a contract. It sounds obvious, but contractors are sometimes induced to start work, or perform change orders / additions to contracts, without an executed document in hand.  Maybe the project owner is in a rush, “We need for you to start right away so we can be completed on time.  We’ll do the paperwork later.”

The contractor wants to maintain good will.  They proceed in the hope that their responsiveness will pay off – and sometimes it does.  There are also times when the contractor incurs costs that are never reimbursed because the contract is not executed.  There could be engineering problems, governmental interference or lack of funding. There are any number of reasons for things to go wrong (as our hero indicated.) And for the contractor, they are all bad.

murphyslaw

On the other hand, let’s say there is no problem with the contract.  The paperwork is signed, the work proceeds, is paid for, and the contract is completed with a profit in hand. Is that the end?

No, not quite. Just like there is paperwork to get into the project, there is more to get out of it.  The contractor should obtain written acceptance of the work by the job owner (obligee.) 

  • This important document establishes a completion date for the contract and concludes a portion of the liability that is attached to all open contracts.
  • It will close the Performance and Payment bond if there was one. Closing the file restores the contractors bonding capacity. 
  • It may also be beneficial with lenders.
  • If nothing else, a written acceptance may be a defense when the project owner attempts to call back the contractor at a later date or claim the work was not satisfactory.

Edward_MurphyThese simple procedures are basic, good business practices. Contractors who win work competitively, and are paid under a lump sum contract, already face significant risks.  It is important to have the correct paperwork in hand when starting, modifying, and ending construction projects. 

Major Murphy learned this important lesson the hard way – but you don’t have to! 

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision and Contract Surety Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

Secrets of Bonding #113: Your 1st Bond – Choose Door #1 or 2?

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Every week we get inquiries regarding clients who need their very first bond.  This is a great question and one we love to answer.  It is particularly gratifying to give a new client their first bond – of many!

There are different paths forward depending on the circumstances.  Each door has different aspects.  Let’s go over them.

Door Number 1:open_door3

Use this door for contracts (federal and all others) up to about $500,000.  This is the fastest / easiest program with the first bond approval coming over in about 1 day!  Only a one page application is needed – no financial statements.  The program is predicated on the work being simple and normal for the contractor, and personal credit reports of owners and spouses must be acceptable.

This door is perfect for companies that are not pursuing contracts in excess of $500,000.  Other applicants can also use it as a quick way to start while completing the application process for higher amounts.

As with all the doors, there is no charge to get pre-qualified for bonding!

Door Number 2:

This is for contracts from $500,000-7500,000.  Similar to Door Number 1, but now add “in house” company financial statements and/or tax returns. A longer questionnaire is needed, and supporting documents such as resumes, references and personal financial statements may be required.

Door Number 3:open_door1

For contracts in the $750,000-1,000,000 range, plan on a CPA prepared Compilation financial statement.  This is the lowest level (least expensive) CPA financial report.  It is needed once per year.

Door Number 4:

Contracts over $1-2 million may require an annual CPA Review financial statement.

Number 5 (fancy!):open_door5

For large contracts in excess of $10 million, a CPA Audit may be required by the underwriters.

It makes sense that as the obligations become larger, higher quality, more complete information is needed.

Is there some flexibility?  Sure!  It may not seem so, but underwriters are motivated to be flexible and find ways to write the business.  After all, no bonds = no revenues.  They must find ways to say yes.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, AVP: 856-304-7348

First Indemnity of America Ins. Co.

Secrets of Bonding #104: Your Bid is BUSTED!

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Contractors put so much effort into the bidding process. And yet, there is one thing that can cause the bid to be thrown out, BUSTED! All that effort is wasted. 

Busted-1For contractors pursuing public works projects (city, state, and federal), bidding is how they acquire most new jobs. A lot goes into creating the project proposal. The estimating, subcontractor pricing, materials, insurance, it all takes time. When their bid is busted, they lose the time and expense dollars plus the revenues are unrealized. That’s a huge drain management must avoid.

The Process

Almost without exception, public works projects require bid security to accompany the proposal – usually issued in the form of a Bid Bond. The contractor uses a Bond Request Form to notify the surety of the upcoming bid event. They state an estimated contract price (ecp) on the bond request form, which is the focus of the underwriting decision. It is the approximate expected amount for the Performance Bond that follows when the contract is awarded.

The ecp is a guesstimate. Sometimes the subs come in higher than expected. Material costs could jump, especially when unique items have been stipulated: expensive electrical equipment, etc. The final bid number may be higher than anyone anticipated. Then what?

The Issues

It is possible that the bid documents will not support the new, higher amount – resulting in a lost opportunity.

Busted-2This can happen if the bid bond indicates a maximum dollar amount. Federal projects require a bond for “20% of the attached bid,” meaning it automatically adjusts to the contract amount being submitted. But in some cases, a “capped bid bond” is issued.  It will not follow the contract amount above the ecp that was approved. Example, a 10% bid bond is issued on a project estimated / approved for $500,000. If the bid bond is capped, it cannot be worth more than $50,000.  When submitted, if the related proposal exceeds $500,000, the bid security is deficient: Proposal is thrown out! (How do you know if the bid bond is capped? See below *)

In some cases (common in New Jersey) a Consent of Surety is also required. The surety must state “we promise to issue the P&P bond.” This too may be capped, “This Surety Consent shall be valid in support of a contract amount not exceeding $500,000.” Here again, the bid is busted at the last minute – too late to have the documents re-issued for the higher amount.

Prevent / Solve The Problem

Prevention

  1. Don’t shortchange the estimated contract amount. Try not to cut it close. There is never a problem if the contractor bids less than expected.
  2. Don’t order the bond too early. Try to gather the pricing first or at least get indications from subs and suppliers. Using the engineer’s published estimate (in the bid advertisement) may not be a sufficient basis for the bond request.
  3. Determine if the bond, surety consent or power of attorney has a maximum dollar value that may limit the bid amount. Knowing about it is half the battle. Consider increasing the ecp to create a cushion.

When Faced With A Last Minute Increase Unsupported By The Bond Or Consent

  1. Notify the surety promptly! If they re-approve the bid for the higher amount, new documents can be produced. Originals could be rush delivered or electronic copies used – if accepted by the obligee.
  2. If the obligee allows, the dollar value of the bid bond can be supplemented with a bank check. Note: If the Surety Consent is deficient, it must be re-issued / increased.

Honor Cap

Here is an important variation: What action is appropriate when there is NO CAP on the bid bond or surety consent? In this case, there is nothing to prevent the contractor from proceeding with the “higher than authorized” bid amount.

We’ll coin a phrase here, the Honor Cap comes into play. The Honor Cap is the ecp that was approved by the surety. Is the contractor willing to respect the bond approval process? If they cannot obtain re-approval in time, will they still submit the bid and worry about it later? The bonding company expects the contractor to honor the approval terms. This is essential if an ongoing relationship is desired. In this case a simple phone call may be all that’s needed. The surety can quickly confirm that the higher estimated contract price is approved.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

* Capped Bid Bond, sample language: “Ten Percent of the attached bid not to exceed $50,000.”

Secrets of  Bonding #103: “Expert” Surety Quiz

Steve Golia5 Comments

If you have been reading our surety articles (well over 100 have been published), you may know SOMETHING about surety bonds by now.  So let’s see if you know more than the basics!

(Answers and your Award appear at bottom.)Test

Begin!

  1. When calculating Working Capital “as allowed,” what portion of an HVAC contractor’s Inventory is included when analyzing an audited Balance Sheet?
    1. 50%
    2. 75%
    3. 100%
  2. Why do underwriters prefer to NOT issue Performance and Maintenance bonds simultaneously?
    1. The bond premiums cannot be accurately calculated
    2. It is not yet known if the project will be built correctly
    3. Performance Bonds may automatically cover one year of defective materials and workmanship
  3. Which accounting method is not acceptable to sureties and why?
    1. Completed Contract, because it excludes open projects
    2. Percentage of Completion, because unearned profits are excluded
    3. Cash, because Accounts Payable, Receivable and other items are excluded
  4. Which if the following assets is treated as Long Term by accountants and Current by surety analysts?
    1. Cash Value of Life Insurance
    2. Face Value of Term Insurance
    3. Pending liability claims
  5. What is the % of bid spread? 1st $125,000  2nd $ 168,000
    1. 34%
    2. 26%
    3. 34%
  6. The purpose of a Dual Obligee Rider is:
    1. Prevents claimants from Dueling over the proceeds of the bond
    2. Protects the surety from paying the bond amount more than once
    3. Assures that all “interested parties” can make a claim
  7. A “Capped Bid Bond”…
    1. Has a definite expiration date
    2. Has a maximum aggregate
    3. Has a maximum penal sum
  8. Which of these financial statement assets would be disallowed by surety underwriters in their analysis?
    1. Stockholder Loan Receivable
    2. Stockholder Loan Payable
    3. Stockholder Deferred Bonus
  9. What is the Debt to Equity Ratio and how will the surety respond? Total Liabilities and Stockholders Equity: $1,450,000 Stockholders Equity: $250,000
    1. $1,200,000 “Too low!”
    2. .17:1 “Let’s write bonds!”
    3. 4.8:1 “Sorry, we’ll pass.”
  10. When is the surety exonerated on a Labor and Materialmen’s Payment Bond?
    1. Upon fulfillment of the contract provisions and expiration of the applicable lien period
    2. One year after completion of the work
    3. When the original bond document is returned to the surety

 

Answers:

  1. C, because with an Audit, the CPA has confirmed the asset
  2. B, they may want to avoid continuing their obligation if the project encountered difficulty during construction
  3. C
  4. A
  5. A: 168,000 – 125,000=43,000. 43,000/168,000=25.6 or 26%. The low bid is 26% below the second bid.
  6. B
  7. C
  8. A
  9. C (Trick question: You must first calculate “Total Liabilities” which is 1,450,000-250,000=1,200,000.)  Then 1,200,000/250,000=4.8 or 4.8:1
  10. A

Awards

All correct:

7-9 correct:

Less than 7 correct:  

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

Secret #100! Why You Don’t Need Us

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Let’s face it, not all bid and performance bonds are difficult.  Granted, bonds are different from insurance, but with some of the programs out there, you really don’t have to be an expert.

We refer to them as “EZ” type programs.  They have been around for years because surety underwriters realize there is a layer of business that can be processed with minimal handling by a decision-maker. 

At FIA Surety, we are surety specialists.  That’s ALL we do since 1979, and we’re getting pretty good at it…  but you really don’t need our help, unless:

  • The project is over the $500,000 range
  • The client has more than $400-500,000 of work on hand
  • The company is new
  • The project is not in their normal territory
  • Nature of the work is unusual for the client
  • Uncertain if they have the know-howno_idea
  • The job is complicated
  • Job not in the continental U.S.
  • Job term over 12 months
  • Maintenance over 12 months
  • Site or subdivision bond (Our specialty!)
  • Dual obligee such as a lender
  • Non-standard bond forms
  • Excessive bid spread
  • Demolition project
  • Hazardous material / environmental work
  • Marine work
  • Tax liens
  • Bond claims
  • Bankruptcies
  • Poor credit report

OK so maybe sometimes you DO need us…  We know how to handle all the various problems.  Chances are, we know how to solve any problem you run into.  We have the knowledge and the best service standards.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

Happy, Healthy, Prosperous New Year!

Steve GoliaLeave a comment

Best Wishes from your agency bond department: Bonding Pros!

Let us solve your tough bond opportunities in 2015.  That’s what we do!

Have a great idea for a “Secrets” article?  Tell us what you would you like us to cover. What is that one thing you don’t understand, or something that bugs you?  Comment here, write to info@BondingPros.com or call 856-304-7348 and tell us.

Our next article:  Secrets of Bonding #79: Personal Indemnity, How to Avoid it.

Secrets of Bonding #5: Three C’s of Bonding – Plus One!

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Students of the industry are familiar with the “3Cs of Bonding” which are intended to describe the key elements of decision making in surety bond underwriting:

  • Character: Does the Principal (bond applicant) have a credit record and other history suggesting good character and that they will be faithful to their obligations?
  • Capacity: Does the Principal have the skill, experience, knowledge, staff, plant and equipment necessary to perform their contracts?
  • Capital: Do they have the financial wherewithal to finance the new project as well as other current obligations and address any problems that arise?

To understand why these are relevant, let’s take a step back and review the premise under which surety bonds, such as Performance Bonds for construction contracts, are given.

If you read our previous issues of “Secrets of Bonding,” you will recall that bonds are not insurance and sureties do not anticipate claims or losses the way insurers do.  Therefore, the underwriting process is intended to reveal if the bond applicant is likely to succeed without involving the surety.

Surety underwriters dig deep, ask questions, and require proof.  As far as humanly possible, their goal is to have certainty that the Principal can fulfill the obligations that are covered by the bond.

At the end of the underwriting process, the underwriter should arrive at what we’ll call the “4th C of Bonding.”  It is the most important one of all because no applicant has ever gotten a bond without it.

It is CONFIDENCE. When the 3 Cs are evaluated, if the underwriter is confident in the principal’s ability to perform, the bond is approved and issued.

With this in mind, applicants must work through a sometimes arduous underwriting process where information must be gathered, submitted and sometimes re-submitted.  Banking records, references, and supporting documents may be requested.  It can go on for weeks. If you like paperwork, raise your hand!

However, the underwriting process must be viewed as an opportunity for the applicant, not a burden.  The mind of the underwriter is like a blank canvas on which the applicant will portray their bond worthiness. It must be a picture of Confidence.

The 3Cs are all important. But now you know about the critical 4th C.  Without it, no bond was ever written.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  We get to know our agents and bond applicants to maximize Confidence.

Call us with your next Site, Bid or Performance Bond.

Steve Golia 856-304-7348

First Indemnity of America Ins. Co.

(Don’t miss our next exciting article.  Click the “Follow” button at the top right.)