Surety Bond Misconceptions Part 2
In the second installment of this three-part article, we will continue to discuss the common misconceptions those in the construction industry tend to hear about surety bonds. As construction attorneys in Orlando our goal is for contractors to have a full understanding of surety bonds and be able to make informed decisions when it comes to bidding on a project that requires a surety bond. To view the first and third installments of this article, please visit Part 1 and Part 3.
All Surety Bonds Are Identical
Unfortunately, not all surety bond companies are alike. Even if a name sounds familiar, if you haven’t actually used their services you cannot be sure that all will go according to plan during your bonding. This is why it’s recommended that you take the time to verify the surety when procuring bonding for a project. The National Association of Surety Bond Producers suggest that contractors follow a two-step authentication process when picking a surety.
1. Check The Authority of the Surety
The first step a contractor should take is to check the authority of the surety to issue the bond. Florida’s state insurance department can give out the information on whether or not the surety is within the correct project jurisdiction. The contractor will also need to check and see whether or not the surety they’ve picked is included in the U.S. Department of the Treasury Listing of Approved Sureties. If the surety company covers both of these points, it’s safe to use their services.
2. Ask the Surety Company if the Bond has Been Authorized By The Insurance Company
The second step a contractor should take to check their bond is to ask directly from the surety company whether the surety bond has been authorized. Contractors can find surety companies’ contact information in the Surety and Fidelity Association of America Bond Obligee Guide. Once it’s been verified that the bond has been authorized, contractors can be sure that their bonding is complete and secure.
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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.