Surety Bonding Secret 94: Reading The Tea Leaves (Know What’s Coming!)

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The gypsy gazes intently in the tea leaves. In case you understand their meaning, the future is revealed!
Suppose you might predict the longer term inside your Surety Bond activities? In this post we’re going to let you know that it is possible to!
Whenever a contractor or agent contacts us for the bid or performance bond, the primary areas we review would be the written bonding requirements. Those requirements reveal which bonding companies bring the chance. They reveal the ones that will fit. By reviewing the written requirements we can predict if our surety is headed for approval or rejection. These tea leaves must be read! Each time a bond is approved by a surety, along with the surety is disapproved from the obligee, producer is confronted with lost commissions, lost time, embarrassment, lack of a client, and maybe even a lawsuit!
So what should you try to find?
Bonding is usually found near the insurance requirements. Here are several from the common requirements along with what you must know about them:
Circular 570
This document is authored by the government Treasury Department, and is also known as the “T-list” (T=Treasury). The actual edition is simple to look up on the web.
The T-list names the bonding companies approved by the Treasury department to issue bonds on federal projects, as well as the maximum amount permitted for every bond. For federal projects, you have to utilize a surety T-listed to have an adequate amount. A lot of the major bonding publication rack T-listed.
As well as the T-list like a mandatory requirement on federal projects, other obligees may choose to require a T-listed surety be used. They wish to make use of the screening process accomplished by the treasury department analysts.
A pair of things to keep in mind: If the T-listed surety doesn’t perform, the treasury department won’t care or why not be responsible. Secondly, you can find perfectly good sureties which could are determined to not make an application for T-list approval. So not on the list means they are certainly not out there. It is not a signal from a weakness or defect.
The last point, a necessity that this surety has to be “certified through the federal government” will not literally mean the issuance of the certificate. It just means “T-listed.” The us government calls sureties about the treasury list Certified Companies.
A Rated
This, of course, means A.M. Best rating. It is a regularly employed criteria, though insurers have gone under while going for a favorable Best rating. And trust me, if they’re wrong, they really don’t care!
Tip: In case your surety won’t match the stated requirement, the credentials of these reinsurer may be exposed to the forefront by issuing a cut-through rider. As a result the reinsurer responsible being a primary carrier. It is fees, rather than all reinsurers need the exposure. But sometimes it’s rather a solution.
“Authorized to have an account… ”
This is also perhaps the most common requirement. It indicates licensed from the state insurance department. It is worth knowing about, because such licensing may actually stop available.
When there isn’t any written bonding requirements..
Yippeee!? Maybe not.
Use caution if you find nothing proclaiming that a bond is required. Some obligees want the assurance of knowing the principal is bondable, without actually investing in a bond. It is not necessary any longer practice, right?
Corporate Surety or Individual surety
Don’t assume all sureties are corporations. Some public bodies accept either. And then there are others that only accept a corporate surety. A personal obligee could possibly have the latitude to just accept both. Be sure to know very well what is essential.
Conclusion: These tea leaves let you look at future. In case you develop a file having an insurer or surety that doesn’t meet the criteria, that you simply doomed to some rejection and the related pain.
Understanding the written requirements can assure that you happen to be deliver a product which meets the client’s needs. It’s not magic. It’s only good business!