Question 1

Is a surety bond the same as insurance?

Accepted Answer

No. A surety bond is generally a three-party agreement involving the principal, the obligee and the surety. Traditional insurance is generally a two-party risk-transfer arrangement. The underwriting, obligations and claims process are different.

Question 2

Who are the parties to a bond?

Accepted Answer

The principal is required to furnish the bond and perform the obligation. The obligee requires the bond and is protected by it. The surety guarantees the principal's performance to the obligee.

Question 3

Can a first-time or credit-challenged applicant obtain a bond?

Accepted Answer

Possibly. Approval depends on the bond type, amount, financial position, experience, indemnity, collateral when applicable and the available market. AGS reviews each submission individually and looks for the most appropriate program available.

Question 4

How quickly can a bond be approved?

Accepted Answer

Timing varies. Many straightforward commercial bonds can be reviewed quickly, while contract and complex bonds require more financial and project information. A complete submission is the best way to accelerate review.

Question 5

What does a bond cost?

Accepted Answer

Premium depends on the bond type, bond amount, term and the underwriting evaluation of the applicant. Commercial bonds are often rated on the bond amount, while contract bond rates typically apply to the contract value and the surety's assessment of the account.

Question 6

What is an indemnity agreement?

Accepted Answer

It is the agreement under which the principal, and frequently its owners, agree to reimburse the surety for losses, costs and expenses paid under the bond. Indemnity is a standard requirement in surety.

Question 7

When is collateral required?

Accepted Answer

Collateral may be requested where the financial position, bond size, bond form or circumstances warrant additional security. It can take the form of cash, a letter of credit or other agreed security.

Question 8

What is bonding capacity?

Accepted Answer

Sureties generally set a single-job limit and an aggregate limit for total bonded backlog. Both can increase over time with stronger financial reporting, completed-project history and consistent performance.

Question 9

Do you work with insurance agents and brokers?

Accepted Answer

Yes. AGS Surety provides wholesale placement support for agents and brokers who need additional markets, larger capacity or help developing a stronger submission. The client relationship remains with the producing agent.

Question 10

What should I send to start a review?

Accepted Answer

Send the bond form or contract language, the bond amount and the date required. For contract bonds, include current and prior-year financial statements plus work-in-progress and completed-jobs schedules.

Question 11

Does a quote guarantee a bond will be issued?

Accepted Answer

No. Any indication is subject to underwriting, final documentation, market availability, obligee acceptance and applicable licensing. Nothing on this website is an offer or a commitment to issue a bond.

Question 12

Can AGS Surety also place commercial insurance?

Accepted Answer

Yes. AGS coordinates commercial liability, property, auto, workers compensation and related coverages with the insurance requirements contained in contracts and bond programs.

Surety Bond FAQ: Straight Answers on Bonds and Underwriting

Bonding, underwriting and process

Question not answered here?