Modern Contractor Solutions November 2024 - 17

Pricing can vary, depending on particulars
like contract scope and project duration.
Payment and performance bonds typically are
coupled as one bond, priced between 0.75 to
3 percent of the contract price.
MEETING THE " THREE C'S "
Contractors need to have a certain
standing as solid businesses to qualify for
a surety guarantee. Underwriters look for
these characteristics:
Character: The applicant-or principal-must
show a credit record and business history
that reflect good character and integrity.
Also important is a record of meeting
obligations. Sureties will examine such things
as references and reputation, quality of
relationships with primes, subcontractors,
and vendors, as well as credit reports, bank
records, and even the owner's personal
financial statements in many cases.
Capacity: It's also key for the principal to
have what it takes to fulfill the contract, from
skill and experience to staff and equipment.
To this end, sureties look into the success of
past projects, the backlog of new and existing
ones, and contractual language. Continuity
and succession planning are also examined,
as are the project-management systems
and controls.
Capital: It's instrumental for the principal
to have the financial strength to take on
new projects while managing current
obligations-and be able to respond to
unforeseen problems. Extensive current
financial documentation is required,
including a CPA-prepared annual report
and interim financial statements. Also
necessary are work-in-progress schedules,
a bank line of credit, and personal
financial information.
Securing a surety bond can be an onerous
business. Having a broker partner with surety
experience and know-how is key, not merely
as a guide through a rigorous application
process but to identify and remove potential
barriers on the path.
about the author
Marty Moss is the president of Surety/Bonds at
global insurance brokerage Hub International,
overseeing surety operations and managing a
team of 25 dedicated surety professionals. Marty
specializes in working with large clients and
those with advanced technical complexity across
a variety of industries, including construction,
mining, manufacturing, environmental, and
disaster Recovery. He has underwritten and
managed a wide variety of companies from large,
diversified programs for Fortune 500 clients to
middle market privately held companies.
BUILT TO
PROTECT YOU.
Delivering quality coverage for
contractors across the country.
Your business builds America's foundation of
success. We're proud to serve contractors,
our largest class of business, with policies that
meet their unique coverage needs. Since 1917,
BITCO has provided customized insurance
programs across the country, dedicated to
protecting you and delivering confidence day-in
and day-out.
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Get the service you deserve.
Visit BITCO.com to find a specialist agent near you.
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NOVEMBER 2024
17
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Modern Contractor Solutions November 2024

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