Bond Underwriting
Bond Premiums

The first thing to remember when dealing with bonding is that it is not insurance. It is a surety, essentially a fiduciary contract. There are three parties to this contract, the contractor, the owner of the project and the Surety company.

For the contractor one of the most important "tools" is having a strong supporting surety bonding facility. It is something that is required by many project owners in order to even bid on a job and can be a valuable sales tool as well.

We have years of experience in dealing with the surety companies and have seen the trends of the industry that can make getting bonds very difficult indeed.

We have the know-how to set up and manage the relationship between contractor and surety company. Establishing a strong relationship with the surety company is one of the most important goals we promote to our clients as it is paramount to the successful contractors business.

The most common public works and construction surety bonds utilized in Canada are;

Bid Bonds

Surety Consents

Performance & Payment Bonds (Labour & Material)

Advanced Payment Bonds

Release of Hold Back Bonds

Maintenance Guarantee Bonds

The last three mentioned, are frequently used by contractors as a means of improving cash flow.

The arranging of bonding facilities can be likened to the establishment of banking line of credit.

Selection of a bonding company should only be made after consideration of their financial strength; evaluation of their staffing, experience and understanding; their ranking by premium volume in the surety field.

Bonding companies rely on us to have the in-depth knowledge of our contractors ability, integrity and financial responsibility, as well as their corporate planning and objectives, work on hand and specific jobs being considered.

We make it a regular practice to arrange for contractor and surety company to meet at a senior management level in order to make the bonding company an understanding and contributing partner to the success of our contractor clients' operations.

Our role as broker also extends to assisting in the design of procedures for the early identification of bonding requirements on specific jobs and for the bonds timely production. We can also advise on corporate policy concerning requirements for sub-trades in providing bonding.

With years of experience in negotiating and maintaining surety bonding facilities for many clients, we have developed a mature and informed understanding of both the construction industry and the surety bond business giving us the skills to provide professional advice and service to our clients.

Arranging Contract Bonding Facilities involves much the same type of process as in establishing a banking line of credit.

Bonding companies in almost all cases require a minimum of ;

completed contractors questionnaire (providing background information on principals)

three years of financial statements (prepared by a C.A. on a review basis) and recent Interim Statement of Applicant and of all related Corporations or of Corporations which have a partial or full common ownership whether active or not

purpose and description of operations of each of the related or privately owned Companies whether active or not, including a family tree showing share ownership

uncompleted Work Schedule as of the latest financial year end and as of a current date

current listings of aged accounts receivable and payable

current bank letter (stating credit line limits, current usage and terms with bank)

largest job reference letter (from owner of job stating final contract price and fact that job was completed on time and according to specs.)

In addition, personal financial statements are generally requested from the principals of the subject contractor.

In our view it is important to this process for the contractor principals to meet with the senior personnel from Surety Company. We would, of course, play a role in facilitating such a meeting.

Terms and conditions are negotiated with the Surety Company. Normally an annual fee is charged for the service which includes an unlimited number of Bid Bonds and Surety consents. Actual Contract Bonds that follow are charged for on a per contract price basis.

If you have any questions about your business insurance, please feel free to email us;
John, Dick or Carol.