What Businesses can use Surety Support?

What Businesses can use Surety Support?

In my last column we discussed how a Bond-Only Surety Managing General Agency, like South Coast Surety, can act as an independent insurance agent’s own surety department. Today we are going to chat about the many businesses that can benefit and grow their business with a good Surety relationship established for bidding and bonding contracts.

Most often, when you hear the mention of a “Contract Surety Bond” in any conversation it is in conjunction with bidding for and bonding a construction (sticks and bricks) contract. This makes sense since the surety industry, as we know it today, was created out of legislation in regards to federal public works projects to assure performance of the contract and payment to certain laborers and materials suppliers. So yes, any business that is involved in construction can probably benefit from a surety program, but many other companies provide products and services beyond construction to public entities.

Private industry has always provided goods and services to our government. Supply and Service Contract awards make up a significant portion of governmental budgets across the country.

Supply type accounts can include; Office/School Supplies, Flooring/Counters, Fencing, Modular Buildings, Work Trailers, Landscape, Portable Restrooms, Cabinets, Printers, Computer/Electronic Equipment, Irrigation Equipment, Boiler/Generators, Low Voltage Wiring, Software, Wireless Installations, Specialized Vehicles, Concrete Piping and many more.

Service type work can include; Guard / Security, Transportation/Bus, Janitorial, Entertainment, Landscape, Photography, Window Washing, Pest Control, Food Service, Wireless Networking, Street Sweeping, Boiler/Generator Retrofit, Tower Maintenance, IT Support Medicaid Management, Social Services, Educational Testing, Waste Hauling, Debt Collecting  and much more.

Recognizing that non-construction contracts were quite different from the construction contracts that created the corporate surety world, the surety industry gave Supply and Service Contract Bonds their own class code (Class Code 500) in 2004. Many contracts that could fall into this class are possibly still being reported as construction type contracts. Even with that said, the growth in the reported direct written premium over the years on record is very impressive. Starting with $15,077,697 reported in 2005 to the $104,999,990 reported in 2015.

What this all means is that there are a significant number and types of businesses, outside the field of general construction, which can benefit from a strong surety relationship. Many landscapers, janitorial companies, transportation firms, maintenance organizations, general suppliers, modular installers, IT companies and many others can grow their business with the assistance of having a surety program. So as a business owner, you should be looking around for such opportunities. If you are an Independent Insurance Agent, you should be reviewing with all your business clients, the potential of establishing a Surety Line of Credit.

In my next column I will layout the values of adding a Professional Surety Agent to your advisory team of professionals, along with a strong insurance agent, accountant and attorney.

By | 2019-02-27T19:56:51+00:00 February 26th, 2019|contract bonding, insurance agents|0 Comments

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