I have sold a lot of contractor bonds over the years and I think there is a big misconception about what drives contractor bond prices. I know that every day I am going to be asked the question, “Why is it so much higher than what my friends pay?” Sometimes I have to explain to a construction business owner what drives the price of a bond and how they can lower that dollar cost and reduce / eliminate time spent searching aimlessly. Here’s a quick article on how to get your contractors’ surety bond, be it a license or performance bond as cheaply as possible.
Here are some points to remember when purchasing a contractor bond.
- Check Your Credit Before You Buy – The insurance agent on the other end of the line has many different surety companies that can post surety bonds. Knowing that he has perfect credit, less than perfect, or even poor credit can quickly determine which application from which surety company. Please respect your insurance agents’ time on the phone. Example: inaccurate information on your credit report that could double the price of your bail and later discover that you could have paid a parking ticket and received the standard rate.
- Buy 30 days in advance. Let the insurance agent find which company will charge the least amount. Plus, save money on shipping costs, as having a few extra days can lower the cost of posting the bond. If you don’t have to pay $ 36 for overnight shipping every year because you did it a month in advance. You will save money and reduce your stress.
- Gather your bond file. Start a file on your computer or a paper file. Use your taxes, bank statements, irrevocable letters of credit from your bank or credit union to start your file. Ask your agent about “anything else you may need to get this surety approved.” Having an up-to-date resume with project examples also leaves subscribers “warm and confused” because they know that this $ 600,000 car wash project is not just one of your average projects, it is something you excel at. As it has built 32 other car washes in the last 12 years.
- Have a good relationship with your surety company. Having a long-term relationship with your insurance company will improve your ability to get bond approved. Sometimes surety Section Bonds companies come by because surety is needed for the last minute. On large scale projects, having been a past compliance bond, current / past license bonuses, and having been prequalified for your liaison ability will allow you to get your bond approved THAT DAY. You are finalizing / submitting your offer while your competitors are buying a bond.
- Don’t make them pay if possible. Everyone receives a complaint. It is part of the construction world. The last thing you want to do is have a surety company pay a surety claim. Not only will new bond companies decline, but the current one could stop issuing its bond if it avoided correcting the problem in the first place. Example: Contact your agent to file an insurance claim instead of dodging a customer’s phone calls for three weeks about a leaking shower drain.
Finally, in order for you to get the best price for your bond, you need to check your credit, shop 30 days in advance, gather your bond file, establish a relationship with your surety company, and take care of complaints before they reach the point at which the state files a claim for bail against the bail.