Although handled as a line of insurance, surety bonds have many features similar to ordinary credit obligations, because the bonding company's financial worth guarantees your performance or payment obligation for whatever is the subject of the bond.  Underwriters generally look first at much the same references on an applicant as would be reviewed by any grantor of credit.

Surety underwriters typically look into an applicant's:

  • Experience as it relates to the project to be bonded
  • Equipment & personnel as they relate to the project to be bonded
  • Credit rating
  • Banking relationships
  • General character

Underwriters will want to see complete documentation detailing your project or requirement, including details from the party who requires the bond, an actual copy of the bond language, a completed application, and your credit information, including recent financial statements.

For anyone lacking sufficient qualifications, underwriters may demand collateral to be placed under their control, in much the same manner as ordinary lenders. Collateral is then held until all obligations guaranteed under the bond are satisfied.

A final requirement by underwriters for any surety bond prior to issue is a signed indemnity in which the applicant guarantees reimbursement to the surety for any sums paid out under the bond. (Surety theory being that bonds ideally would never pay any unreimbursed claims.)

In addition to performance and payment bonds, there are endless varieties of license, permit, judicial/legal and other highly specialized bonds, each of which guarantees adherence to specific regulations and/or requirements.

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