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Whenever you’re asked to obtain a surety bond, you will need to make sure it is backed by a reliable surety bond company at the best price possible. Getting bonded with the wrong company can cause delays, or even leave you with a surety bond which is not backed.
But not all surety bond companies work with clients directly - most do not. Therefore, businesses usually get bonded via so-called surety bond agencies.
So what’s the difference between bonding companies and bonding agencies? And how would you determine whether the company that supplies your bond is reliable? Read on for all the facts.
What is the difference between a Surety Bond Company and a Surety Bond Agency?
There is an important difference between surety bond companies and surety bond agencies. A surety company is the company which backs the surety bond. It also pays any valid claims if such are made against a certain bond. This means that the surety company is the financial guarantor of the bond, and that it assumes the risk involved in issuing a bond.
Most bonding companies do not work with individuals or businesses directly. Instead, they work with surety bond agencies, such as Bryant Surety Bonds. Agencies connect businesses with bonding companies. And because agencies work with many companies, they also look for the best and lowest surety bond cost from among these companies to offer to their customers.
It is important to know what to look for when assessing whether the surety bond company which will back your bond is reliable, stable, and professional.
How do you know if your Surety Bond Company is reliable?
There are a three main indicators that can tell you if a surety bond company is professional and reliable or not. These are:
- Company License
- Company A.M. Best Rating
- Company Listing
Company License
In order to operate, both the surety bond agency and the surety bond company must be licensed to do so. If your surety company is not licensed in the state that you are obtaining a bond in, and issues a bond for you, your bond will be rejected by the obligee and you will have wasted your time and money. Therefore, before you get your bond you must check whether the company is licensed.
Company A.M. Best Rating
The A.M. Best Rating is another important and telling indicator of the financial stability of a bonding company.
A.M. Best Company, Inc. is a rating agency that issues financial strength ratings, which demonstrate the ability of an insurance or bonding company to pay claims. A.M. Best Company is a Nationally Recognized Statistical Rating Organization (NRSRO) by the U.S. Securities and Exchange Commission (SEC) and the National Association of Insurance Commissioners (NAIC).
This makes the A.M. Best rating an important indicator. A.M. Best has a ratings scale in which there are a number of ratings which deem a company ‘secure’. These are:
- A++ and A+ (Superior)
- A and A- (Excellent)
- B++ and B+ (Good)
Ratings beneath B+ are considered ‘vulnerable’.
All of Bryant Surety Bonds’ partners companies, without exception, have an A.M. Rating of ‘A’ and above or, in other words, they are ‘A-rated’. This places them among the ‘excellent’ and ‘superior,” and means that they are secure companies who are capable without a doubt to pay claims and back any bond they issue.
Company Listing
Finally, being listed with the U.S. Department of Treasury (DoT) is another very important indicator of the stability of a surety bond company.
Being ‘T-listed’ means that a bonding company has been approved to write bonds for federal government contracts or other high-class contracts. It also means that the surety has been included in the Department of Treasury’s Listing of Approved Sureties which is reviewed on an annual basis.
To become T-listed, surety bond companies must undergo the scrutiny of the DoT, which includes a review of business financial statements and other financial documents. The DoT ‘T-list’ also features other important information about surety bond companies such as the states they are licensed in as well as their single bond limit.
Why work with Bryant Surety Bonds?
As a rule, Bryant Surety Bonds only works with companies which cover all of the above criteria. All surety bond companies that underwrite the bonds we issue are A-rated and above. They are T-listed with the DoT, and all of them are licensed to issue bonds in all 50 states. By working with us, you can be sure that your bond is from one of the most dependable surety companies in the business.
This is also why our bond rates are unbeatable. To see is it for yourself, apply online and get a free quote for your surety bond today! All license bond quotes are free and there is no obligation attached.
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