How to Choose the Right Surety Agency

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Surety bonds are required if one is interested in bidding on public construction contracts or many private contracts. The business seeking surety should make sure it chooses the right bonding agency. Some of the attributes to look for in a bonding agency include:

Expertise: A good bonding agency is well aware of the decision makers in the market. What they need and how they expect things. The agency must have enough experience to know how to best present the surety needs on its client’s behalf.

Simplicity: The application process should be simple enough so that small businesses can also apply without any hassle. It should be fast. Your requests should not get lost in a stack of applications.

Reputation: The reputation of an agency depends upon its relationships in the surety market. A bonding agency who has built strong relationships over the course of its working years can also assist businesses with struggling to obtain bond capacity. It has access to surety providers of all size and thus the ability to negotiate for rates that fit for all size businesses.

Customer care: Staff and personnel are other attributes that determine the ethics of a company. Customer care service needs to be top notch.

Choose the agency that is as hard-working as you are, because all it takes is hard work, good planning and a touch of luck to prosper for any business.

NHC: A Perfect Place to Fulfill all Surety Needs of a Business

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Nielson and Hoover is a renowned bonding agency, facilitating the nationwide procurement & delivery of surety bonds. It is one place with the ability to fulfill the bond needs of a business’s surety needs whether big or small.

They deal in performance bonds, payment bonds, and maintenance bonds. They are also experts in commercial bonds, license and permit bonds, fidelity bonds and more. The experience and knowledge of NHC ensure you get the right surety solutions for your business. The main surety products available at NHC are contract and commercial surety bonds. Due to well-developed and maintained relationships with the top surety providers over the years, it has become possible for NHC to provide customized surety solutions for well established as well as the businesses trying to supplement their capacities. Some of the attributes of NHC are listed below.

  • Provide multiple ways of requesting a surety, including by email, fax, online or by online app. The application process is simple, easy to complete and quick.

  • NHC offers the best rates by being the leading surety underwriter by volume and understanding the risk of the client and obligation.

  • Even companies with weak financial standing can find a surety solution to fit their needs.

  • They have a huge number of professionals and staff taking care of operations, along with the best understanding of the construction business.

When searching for the best way to get your Surety Bond, consider all the aspects and then choose a bonding agent.

Six Commercial Surety Products You Should Know About

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The bonds which do not fit under contract are termed as commercial bonds. Six of these commercial surety products are described below.

License & Permit Bonds: These bonds are needed in order to carry out a business activity that needs a permit from the state or federal government. These bonds act as the guarantee that the Principal will act in accordance with the rules and regulations of the state government. Businesses such as motor vehicle dealers, employment agencies, and liquor dealers need these bonds to get a permit.

Judicial Bonds: These bonds are issued to make sure the Principal performs in accordance with the orders of the judiciary. These bonds are also known as probate or fiduciary bonds. These bonds are purchased by administrators, guardians, trustees and will executors. The executor has to act ethically according to the wishes of the deceased, if not then this bond will compensate the affected people.

Miscellaneous Bonds: They are bought to support distinctive business needs. Lost securities, lease, wage and welfare benefit bonds are some of the examples of Miscellaneous Bonds.

Subdivision Bonds: It is a guarantee that the Principal will construct the improvements such as sewers, gutters and streets in a city or a state.

Federal Non-Contract Bonds: These bonds are required by the federal government such as Medicare and alcoholic beverages.

Public official bonds: These bonds are bought to check that public officials will fulfill their services as expected. The whole purpose is to guard the taxpaying citizens and reimburse them in case public officials are involved in any misconduct.

Advantages of Surety Bonds for Both Contractors and Clients

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Below are several of the advantages to purchasing surety bonds.

Any construction contract company holding a surety bond has increased credibility as qualifying for a bond demonstrates the company’s professional stability.

  • A surety bond binds the contractor with the surety, which gives the contractor access to professional advice from lawyers, accountants, engineers and other professionals.

  • Bonding also offers a protection to the contractor in the event of a dispute with the obligee.

  • Due to increased leverage, a contractor can submit more tenders, which leads to additional contracts and revenues.

These are some of the benefits of surety bonds for contractors. Moreover, surety bonds are advantageous to the obligee in many ways as well.

  • Surety bonds guarantee the obligee the lowest compliant bidder will perform the work for the quoted price.

  • It assures the work will be completed as per the contract.

  • Obligees are ensured suppliers will be paid regardless of financial difficulty at the contractor’s end.

  • Surety bonds guarantee any loss will be settled by the bonding company in the event of the contractor’s inability to take up any unexpected cost overruns.

  • Obligees can be assured the contractor has the financial capacity to withstand the risks involved in the construction business.

A Brief Guide about Surety Bonds

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A surety bond is the best way to ensure a contract will be completed per the agreed upon terms. There are three main parties involved in a bonded contract, the obligee (client), the principal (an individual or business) and the surety (insurance company). An obligee is the person who required the bond, principal is the individual or company that needs to purchase the bond and the surety is the insurance company that backs the bond.

Why do companies purchase surety bonds?

Surety bonding is required by companies which need permit bonds before they get their business licenses. Moreover, construction professionals are often required to obtain contract bonds before they can work on various projects. To make it simpler, a surety bond is required to protect the obligee against any losses incurred due to the principal’s failure to meet the obligation. However, it is mandatory for any federally-financed construction project valued at more than $150,000 to purchase surety bonds. Similar requirements exist for various state projects as well.

Companies with adequate working capital and cash flow to complete a project and good past performance history are candidates and should apply for a surety bond facility.