Desmond Insurance Blog
Before starting a project, a contractor needs to acquire a license bond, a type of surety bond. This bond will serve a crucial purpose for the different parties involved in the project. The license bond helps you, as the contractor, and it acts as a promise to the client that you will deliver ethical and professional services.
Here are the step to ensuring you get the best rates for your first or subsequent license bond.
Determination of the Requirements
As the contractor, you must know what entails the license entities required to proceed with your project. Usually, you need an insurance policy and a surety bond for the licensing. An insurance policy will cover your security and protection.
The surety bond will provide the money that you may need when there is loss from failing to comply with the rules and regulations. Surety companies often have underwriters who determine the initial or renewal premium a contractor needs to pay.
Assessment of the Cost
The approval of a contractor license bonds relies on the level of risk and chance of claiming against the bond. Sometimes, the surety company requires an underwriter review which breaks down an applicant's qualification into capital, character, and capacity.
The 'capital' is the contractor's asset as the source of money to repay the surety for claims. The 'character' is the contractor's reliability to obligations and the physical evidence for this is a soft credit check. The 'capacity' is the contractor's ability to repay the claims against the license bond.
After the review, the surety company often provides a quote between one to three percent of the total bond amount. Avoid failing to repay your previous surety bond, so there is a greater possibility for a low quote.
Making the Costs Reasonable
When you are all set with the initial requirements, the actual acquisition or renewal of the license can be costly. To assure reasonable costs, you should work with the right surety provider, one who views the interaction as a partnership.
Another way to increase the likelihood of getting a lower quote: have a good credit history and a detailed résumé listing all relevant experience.
Along with the surety bond, make sure to acquire commercial insurance for contractors and trades. Your financial burden is secure with us.
At Desmond Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (859) 491-5100 or Click Here to request a free quote.