Surety Bonds

Surety bonds act as a guarantee, ensuring that your business performs a particular level of service or provides a certain quality of work and does so in an ethical manner. There are generally three parties involved in a surety bond:

1. Principal: the company or individual purchasing the bond
2. Obligee: the entity, government agency or organization requesting the bond
3. Surety Bond Company: the company that underwrites the bonds

Although a surety bond is not insurance, it can provide protection to the customer or client by ensuring that the company will fulfill its obligation for work or delivery of goods. If the business does not complete work or deliver the goods as stated by the bond, the customer can request to be compensated for their losses through the surety bond. Surety bonds are commonly issued for industries like construction, home repair, but are also used in other businesses such as auto dealers, RV dealers, and boat and motorcycle dealers.

Any company wanting to obtain a surety bond must apply and submit an application to the issuing bond agency. The application process may require one or more pieces of information depending on the surety bond issuer. This may include current and past company financial statements, personal financial statements from the owners, and other documentation. The application process is similar to that of applying for a bank loan or line of credit and the more information provided, the more likely the application will be approved. The company purchasing the bond also pays a fee called a “surety bond premium.” Once the bond application is approved, the yearly renewal premium is charged to maintain the company’s status as bonded. Favorable business and personal credit along with supporting financial papers that are in proper order will increase the chances of a lower bond premium.

The cost of your surety bond can be based on the risk that is associated with the bond language itself, the term of the bond, past business history and your professional and personal financial history.

Unfortunately, many underwriters are no longer renewing their client’s surety bonds and the application process is often difficult, with stringent requirements, eliminating businesses from being bonded. Increased surety bond premiums also prevent businesses from completing the surety bond requirements.

At SL Specialty Insurance, companies applying for bonds will find a bond agency that makes the underwriting process simple and worry-free, with more than 20 years of providing surety bonds to our chosen markets. Our agency is able to provide businesses applying for surety bonds with the best bond solutions and lowest cost through our network of “A” rated companies we work with. We can approve surety bond applications and MVD Bonds that most other agencies turn down because of the specialized bond classes we work with and the sheer volume of written business.

We make it easier for a large number of companies applying for surety bonds to be granted bonds, due largely to the fact that we accept those companies applying for a bond with a range of credit rankings. In today’s business world, it is not uncommon for a business owner to have experienced a few credit woes in the past, but this does not have to keep your business from getting the bond that is being required.

At SL Specialty Insurance, many of our clients have excellent credit; however, we also accept and write MVD bonds for new and established dealers who have experienced:

• Bankruptcy
• Filed Liens
• Home Foreclosure
• Home Loan Modification
• Low Cash Reserves
• Low Credit Score
• Negative Net Worth

Dealers who apply for MVD bonding with our agency do not need to own real estate, unlike the bonding guidelines of some other bond agencies that do not specialize in this market. Our agency is among a handful of specialty carriers offering surety bonds to those who are considered “high risk or hard to place” because they do not meet the standard prerequisites that are called for by most bond companies. Outstanding liens, past bankruptcies, and bad credit can all keep an applicant from qualifying for a regular surety bond with a non-specialty bond company.

Because of the sheer volume of bond business we produce in our niche markets, we can approve bonds for individual business with excellent personal and business credit to those businesses with poor credit. What’s more, we can approve bonds without personal financial statements or business financial statements. Our bonds are typically priced lower than others who deal in this specialty market.

We offer your business the ability to get bonded quickly, easily, and without jumping through a lot of hoops. Our simple bond application can be downloaded on our website, or you can call us and we will take the application from you over the phone. Most of our clients are able to complete the bond application in just a few minutes, but we are available online or via phone to help. Our knowledgeable staff stands ready to get the ball rolling and get your business the bond you need. We can have your bond ready and filed within 24 hours.