A Guide to Choosing the Right Bond Company 

Choosing the right bond company can make all the difference. Getting the best deal is critical for construction contractors looking to get bonded.

Bond company, bond agency, and bond provider are terms you may encounter as you research your options. This guide will help you understand the differences.

Reputation

Choosing the right bond company is a crucial business decision. It can impact your reputation, the ability to get bonded, and your bottom line. The industry has many providers, from small providers to large multinational insurers.

With so many options and varying state regulations, it’s essential to understand the different terminology. Ensure you know the difference between a bond company, broker, and agency, the type of bonds they offer, and their bond capacity.

A reputable bail bond company Allentown PA has been thoroughly vetted by a third party. This means they have a solid financial background and will be around to pay out claims.

The wrong bond provider can prevent you from satisfying your bonding needs, known as “outgrowing them.” A good bond broker will have enough single and aggregate bond limits to cover your current and future bonding needs. They’ll have experience working with various business sizes and will be able to provide the types of bonds you need for your specific business.

Experience

Bonds are a valuable investment for companies, contractors, and small businesses. Whether your business must be bonded as part of state licensing requirements or you want to ensure your work is completed on time and within budget, bonds establish trust with clients and customers.

A reputable bonding company takes a long-term approach to client relationships and understands that building solid relationships is the key to business longevity. Look for a company that offers competitive rates and an experienced team that can help you determine what type of bond you need to protect your business.

When researching bonding companies, remember that “bond company” is used interchangeably with “bond agency.” A bond agency is a business that works directly with the public to sell bonds; however, a bond company is the entity that issues the actual bond. Bond companies are also referred to as bond carriers or insurance providers.

A-Rated Carriers

Getting bonded is essential for any business, whether it’s to meet state licensing requirements or to ensure that they can compete for a government contract. But, not all bond providers are created equal, and a mistake with the wrong company could cost your business time and money and even prevent it from being eligible to get bonded.

The most important consideration is ensuring the bonding company has sufficient financial strength to back your bond. Standardized rating companies evaluate and grade bonding companies for their stability and ability to pay claims.

Unfortunately, these same companies are paid by the bond issuers they rate, creating a conflict of interest. This has led to investors over-relying on ratings instead of doing their due diligence.

When evaluating potential bonding companies, consider their A.M. Best ratings and their single and aggregate bond limit capacity. Ensure that the company has enough power to meet your needs now and as you grow, whether with state license bonds or more significant bond amounts for construction projects.

Capacity

A bond company, or bond agency, is a business that sells bonds. A reputable one can help get the best rates on your bond and should also have extensive industry knowledge.

A reputable bond company should have solid financial representation and be involved in construction and surety trade associations. They should also be able to teach you about how bond cash flow works and help you create the right plan for growing your capacity.

Increasing bond capacity is critical to moving your contracting business forward. It allows you to bid on larger projects and work through your existing bonded contracts backlog. However, building the proper foundation for your bond capacity takes time and commitment.

Choosing the right bond company and working hard will make all the difference. This will set you up to succeed and grow your business. So, what are you waiting for?