To view this notification widget you need to have JavaScript enabled. This notification widget was easily created with NotifySnack.

Why Do Businesses Need Surety Bonds?

Examining Unique Situations And Bond Importance

 

There are many laws and regulations within the country of Canada that govern businesses and other professionals. If these groups or individuals are caught breaking these laws or fail to abide by the governmental regulations, they’ll wind up in a great deal of trouble. This is why it is absolutely pertinent to familiarize yourself with the Canadian statutes, which govern your business or your line of work. In many circumstances, you’ll find that bonding will be a necessity. What are surety bonds and why are they required for many businesses and professionals? These answers are not always easily attainable.

 

Fundamentals Of Surety Bonds

 

First and foremost, you should learn precisely what surety bonds are and how they work. Once you’ve learned a little more about surety bonds, you’ll already start formulating an ideal as to why they’re required. A surety bond is a type of contract between two individual groups or people. Within this type of scenario, one entity, which is identified as the principal, is responsible for fulfilling an objective within a certain period of time. The other group, which is known as the obligee, is the one that is serviced by the principal.

 

The principal is required to perform to their best of their ability, thanks to the presence of the surety bond. If the principal fails to satisfy, the bond helps to ensure that the obligee will be able to take action and recover losses.

 

 

No Universal Reason

 

When it comes to surety bonds, it is often easy to ignore the massive quantity of different bonds and focus on one or two. For instance, some individuals will only focus on construction bonds, while others will immediately think about license bonds. In order to truly understand the specific reason that bonds are required, you must look at the bond in question. As a whole, there is no universal requirement reason. The requirement is set in place for different reasons and you can only find out why by looking at the unique bond that your business must acquire.

 

Construction Bond Requirements

 

Now, if you really want to learn why businesses need surety bonds, you need to delve into the specifics of each bond. Construction bond is a term, which is used to identify a handful of different bonds, such as bid bonds and performance bonds. When it comes to the bid bond, the construction contractor is required to obtain the bond, before placing their bid. Why is this the case? There is actually a good reason for this and it does help the contractor.

 

There are thousands of people in Canada that would love to be able to secure a construction contract. Unfortunately, many of these individuals would not be able to complete the project within a reasonable period of time. Others may not be able to do so in a satisfactory manner. The bond helps to protect the system, while also providing the contractor with credence. Thanks to the requirement, the system remains efficient and the contractor doesn’t have to worry about being undercut, by a company, which will disappear within a few months time.

 

In the sense of the performance bond, the aforementioned information still applies. The performance bond helps to make the construction contractor seem much more legit and trustworthy. By agreeing to obtain this bond, without being asked, may give you the upper hand. It also helps to prevent a viable project from being taken by an unreliable contractor.

 

 

No Bond No Work

 

Every business in Canada wants to be able to generate sizeable revenue. What else would be the point in running a business? If you concur with this statement, you should know that bonds are more important than you could ever imagine. It is absolutely essential to acquire the right bonds, if you wish to acquire projects, perform your duties, and get paid for your services. If you do not posses the required bonds, it will be illegal for your business to perform its duties! This is truly the most pertinent reason for all Canadian businesses to acquire the bonds, which are required by their province, as well as the Canadian government.

 

Protecting the Public

 

If you are considering starting a new business, you should begin by researching the requirements of an upstart business. Of course, nothing is as it initially seems, since there are many hurdles that you will need to jump, before you reach your goal. Not only will you be forced to apply for a small business license, but you will need to apply for a license bond. You must obtain the license bond, prior to applying for your business license, because a copy of the license bond will need to accompany the licensure application.

 

A license bond is a type of commercial surety bond that ensures the government that you are going to comply with the terms of your business license and the underlying provincial laws. This is basically the only way that the government can protect the public from fraudulent behavior. Business owners that value their business and reputation will comply with the Canadian statute, because they do not want to risk having their business license revoked.

 

Public and Private Contracts

 

Any contractor that plans on bidding on a public or private construction project may need to post a surety bond. These bonds ensure the Canadian government or project owner that the contractor will comply with the specifications provided in the contract. If at any time, the contractor falters on the contract, the project owner will have the right to file a complaint with the surety company.

 

The surety company will investigate the claim and make a final decision of whether or not the contractor failed to comply the contract terms.

 

Conclusion

 

At the end of the day, surety bonds might feel like an extra expense with no major benefits. This couldn’t be further from the truth. Surety bonds are not only a necessity, but they help to solidify your business as legitimate. If you wish to work and earn money in Canada, it is pertinent to familiarize yourself with and acquire the required bonds, before you get started.


Who Requires Surety Bonds?

A Handful Of Professions

 

As a company, which wishes to operate in Canada, it is pertinent to abide by the government’s laws, guidelines and regulations. If you fail to do so, you could very well end up facing lawsuits, and other repercussions. One of the most common tasks that companies will need to fulfill is acquiring the appropriate surety bonds. These bonds are required by an array of different entities and the specifics will vary depending on your company and the specific industry that it entails. Within guide, you will discover who requires surety bonds and why these are required.

 

What Are Surety Bonds?

 

Before getting into the requirements, it is a good idea to catch upon the basics. A surety bond is simply an agreement between two individual groups. The specifics will prove to be incredibly diverse depending on the specific type of bond in question. In many situations, the bond holds a company to their initial word and helps to guarantee that they’ll pay their subcontractors or will fulfill their obligation. One side of the contact is protected, while the second is required to deliver in some way.

 

 

Who Sets The Requirement?

 

Again, the requirements will vary depending on the specifics, such as your company’s industry and the unique job ahead. In the same sense, the entity, which makes the bond a requirement, will also deviate. If you’re operating a construction company, which intends to bid on a public project, it is highly likely that the province will require you to acquire a bid bond and performance bond. So, in many situations, it is the Canadian government or local provincial government, which sets the requirement.

 

Of course, this is not always the case. In some situations, the project owner will demand the bond. Truly, the specifics are never universal. The specific variables related to the project at hand will depend on the project itself.

 

Why Are They Required?

 

The mass majority of business owners will initially believe that bonds are nothing more than another expense, which will cut into their earnings. Although this may be true to some degree, there are truly a lot of good reasons for surety bonds to be required. First and foremost, the mass majority of bonds are required for one reason and one reason alone. They’re capable of providing consumers with protection from fraudulent companies and devious actions. When the bonds are set in place, the principal is held to their word. If they break their contract, they’ll be hurt substantially and will face substantial financial losses. This gives them plenty of reason to remain on the straight and narrow.

 

Secondly, the requirement of the bond helps to ensure that the system works efficiently. If everyone was able to place a bid or file a court appeal, the system would be overwhelmed and it would likely slow to a crawl, due to the backlog. The requirement of the bond helps to guarantee that only legitimate and trustworthy individuals are capable of placing their bid or filing their appeal. This helps to diminish risks, while also keeping the system running efficiently.

 

Understanding Price Requirements

 

When it comes to surety bonds, you should remember that there is an array of requirements to consider. First and foremost, obtaining and maintaining the bond will most likely be a requirement. Of course, this isn’t the only requirement that will be integral. Secondly, there will usually be a bond amount requirement. The amount required would also be set by the same group or entity, which makes obtaining the bond a requirement. Determining the risk involved will help to set this amount. In all likelihood, a project with a lower risk will come with a lower bond amount and vice versa.

 

Just remember that you will not be required to pay the entirety of this amount. The surety bond will analyze your company’s finances and your personal credit score to figure out exactly how much you’ll be required to pay. Typically, the premium will equate to a small percentage of the required amount.

Federal Contractors

 

Any contractor that is employed by the federal government directly or indirectly is required to be bonded. Of course, this may only be instances, where the development or construction is valued around $150,000 or higher. If you have any questions about the requirements of a federal construction contractor, you will need to contact the appropriate provincial entity.

 

Material Supplier or Vendors

 

If you are supplier, working under a building contractor, you may need to be bonded. A supply bond is a type of surety bond that guarantees the project owner that the supplier will comply with the terms of the contract. Many project owners will only consider suppliers that are bonded, because they are so familiar with the risks of a subcontractor default.

 

Contract Bidders

 

Construction contractors will tend to bid on development or renovation projects throughout their entire career. While, the project owner will often choose the lowest bidder, if they sense frivolous behavior, the project may be awarded to the next bidder in line. The only way to genuinely rule out a frivolous bidder will be to have each bidder submit a bid bond, along with their bid.

 

The bid bond will ensure the project owner that the bidder is more than willing to enter into a contract and capable of fulfilling the contract’s terms. In many cases, Canadian contractors bidding on public projects may be required to post a bid bond. Those bidding on government projects will be required to post a bid bond at the time of the initial bidding process.

 

 

Probate Court

 

Probate courts require executors or fiduciaries to post a probate bond, which is another form of surety bond. This bond is put into place to protect the heir of an estate from fraud. A fiduciary may be appointed in cases, where the heir is underage, mentally or physically incapacitated.

 

 

Overall

 

At the end of the day, the requirements will never remain the same. Each individual situation will call from something different. In order to figure out the specific requirements for your situation, you should take the time to read the related Canadian statutes. These laws will tell you precisely what is required and who requires it.

 


What To Look For In A Surety Bond Broker?

Things To Know Before Moving Ahead

 

It does not matter how large or small your surety bond might be, choosing a reputable and reliable bond broker and surety company is imperative to your success. If you are not familiar with a surety bond broker, you should know that this is a person, who is well informed about surety companies. He or she will guide you when it comes to finding and acquiring the surety bond. Although the mass majority of Canadian brokers are incredibly knowledgeable and immensely helpful, extensive and precise research are necessities. Below, you will learn more information about what you should look for before you hire a bond broker.

 

 

What Does The Surety Do?

 

First and foremost, you should know that a surety is the group that provides the surety bond. Of course, the company does so much more than that. They also put their name out there for you and take on some of the risk involved. Depending on the project or reason you need the bond, you will likely be forced to acquire a bond with a specific monetary value. Since this value is normally substantially, the surety will cover most of the expense. Meanwhile, you’ll be required to pay a small percentage of that total. The surety will set this amount and it will depend on an array of variables, including your personal credit score.

 

Just remember that the surety is also there to protect the developer, owner or consumer. If you do something wrong or fail to abide by the initial agreement, the surety company will be required to hold you responsible in one way or another.

 

Check For Proper Licensing

 

When selecting a bond broker, the first and most important thing that you want to look for is a license. Some brokers will only be licensed for certain provinces. It will be imperative that bond broker is licensed for the province that you are seeking a bond in. The good news is that there is an abundance of modern day brokers that are licensed in all provinces. Be sure to confirm the licensure online, before moving any further along into the process.

Experience Can Be Everything

 

Another very important thing to consider when hiring a bond broker is experience. Just because a bond broker has only been in business for a year, this does not mean that he or she is not good at what they do. However, experience is always preferred, because this means that they are going to have deeper contacts with the industry. A more experienced broker has probably worked with various companies before and this is going to make the whole process much smoother and easier for you.

 

Of course, you will want to make sure that the broker has experience working specifically with surety. Many brokers also delve into insurance. In order to ensure that the broker is able to serve your surety needs effectively, make sure he or she has dealt with surety products for a lengthy period of time.

 

Speak With Your Contacts

 

As a contactor, you are probably in contact with several other contractors on a daily basis. You would be surprised at what information these other contractors could provide you with. Do not be embarrassed to ask these contractors about bond brokers. It is very likely that they have been in the same situation that you are in right now and they could probably give you great referrals to many different bond brokers. If this is the case, this will make your whole search much faster and easier.

 

Make sure that you take their advice and investigate their recommendations a little further, before plowing ahead.

 

 

Online Research

 

The Internet is full of useful knowledge and it would be your fault, if you did not take advantage of this. Many respectable businesses and companies have websites where customers comments on their products and services. Well, the same thing will apply to bond brokers. Before hiring any bond broker, make sure that you do a quick Internet search of this agent.

 

By doing this, you will be able to read what other customers have said about the services that he or she provides. If you discover that previous clients have been unimpressed with the broker’s work, you should do your best to find another professional. Stick with those that have proven their worth time and time again in the past.

 

Turnaround Times

 

Obtaining a bond is a crucial part to the success of your business. This is why it is important that your agent and Surety Company provide you with bonds in a speedy manner. As long as you are providing your agent with all the information that he or she needs in a timely manner, then he or she should have a quick turnaround time.

 

Of course, turnaround times are going to vary depending on the type of bond that you are seeking, but this something that you must check out before hiring an agent. When it comes to bid bonds, a slow broker could result in your company losing the project! Make sure that your broker is willing to work just as hard and quicker as you are!

 

 

Ask For References

 

You are probably going to meet and speak with several different agents, before you decide which one is the best. It is always a good ideal to ask the agents for a list of their references. This will be other people that the agent has worked with or is currently working with. With this contact information, you will be able to get in touch with these people and see what they have to say about the agent you are considering. If these individuals have a lot of compliments to give to the surety agent, you can rest assured knowing that he or she will deliver a worthwhile, pleasant experience.

 

Shopping Around For Rates

 

When it comes to hiring a bond broker, you should remember that the cheapest option might not always be the best option. However, you should be able to find a good reputable agent at an affordable rate. Of course, this is going to take some time and research. Just remember that the rates will depend on several different factors, including your personal credit score standing.


What Is Required In Order To Acquire A Surety Bond Within Canada?

Basic Requirements to become bonded

 

As someone, who is required to acquire a surety bond, you may feel frightened by the unknown. Before letting your nerves get the best of you, it is pertinent to calm down and relax. The truth of the matter is that acquiring a surety bond isn’t overly complicated. However, you will need to acquire several documents, before you will be able to obtain the necessary bonds. Below, you’ll learn a little more about the application process and the documents, which will be needed.

 

Everything That Is Needed

 

It is always a good idea to compile a list of needed items, before rushing ahead. Below, you’ll find many of the documents and details, which are frequently required by most Canadian surety companies.

 

  • A completed application

  • Your company’s financial details

  • Personal finances and net worth statements

  • Personal credit score

  • Work on hand report

  • Account receivables

  • Proposal form may be required

 

Before you make contact with a surety company, it is generally a good idea to compile all of these documents. This will help to ensure that the application process will move along much quicker and that you’ll experience no delays.

 

Application Process

 

The first step of applying for a surety bond will be filling out the application. It is important to note that each bond will have its own separate application. You will need to know which type of bond and the bond amount, since this information will be needed to help determine eligibility, before completing the application. If you have any questions about surety bonds, be sure to contact a SuretyKings’ underwriter and request assistance with the application process.

 

Once you complete the application, you can submit it electronically or personally hand-deliver it to surety company.

 

 

Company’s Financials

 

The applicant will need to provide proof of their company’s financials. The balance sheet, income statement, retained earnings statement, and cash flow statement will be sufficient proof, but the underwriter will determine this. A financial analysis will be performed to determine, whether or not you have enough leverage for the surety bond.  

 

 

Personal Credit Score

 

Your personal credit score will always be required, when attempting to purchase surety bonds. This is the case, because the surety company will utilize this figure to determine precisely how much to charge you. Instead of paying the entire bond amount, the surety will look at your credit score and use it to determine the precise percentage that you’ll be required to pay. Unfortunately, if your credit score is bad, you’ll most likely be required to pay a higher premium.

 

 

Work On Hand Report

 

The work on hand report, or work-in-progress schedule, is incredibly important. This document is utilized to keep track of your company’s progress on the project in question. Typically, the work on hand report will be required each and every 3 months, as well as on an annual basis. Without adequate WIP report, you may not be able to obtain the most generous surety rates possible. Therefore, it is in your interest to fill out and submit the paperwork as required.

 

How Long Does It Take To Get Surety Bonds? – Examining The Typical Procedure

Lets Begin with the Basics!

 

There are hundreds of Canadians, who are entirely unfamiliar with surety bonds. Although some of these people will never encounter a need for a bond, some will and they’ll need to quickly learn about surety bonds, before they’ll be able to do so. Initially, the procedure might seem complex and incredibly confusing. Although there are some complexities involved, obtaining a surety bond is typically straightforward and fairly quick. Below, you will learn about the general procedure of acquiring construction security bonds, so you can figure out precisely how long it’ll take to obtain the needed bond.

 

Undeterminable Timing

 

Many individuals and business owners are under the impression that a surety bond can be issued within days of the initial application. This is a huge misunderstanding that can lead to disappointment for those that are waiting around for a response from the surety company. The pre-qualification process is actually quite lengthy, making the timing undeterminable.

 

The surety works diligently to complete a full analysis of the applicant. This process is a necessity, since it is the only way to ensure the surety that the applicant will be able to meet the contractual agreement terms. The surety company is always at a huge monetary risk and by processing the surety bond application accordingly these risks can be reduced drastically.

 

surety bond process turn around time

 

The General Procedure

 

It should be known that the process of obtaining a surety bond would generally depend on the type of bond that is needed. The amount of risk associated with the construction bond may play a major factor in the difficulty of the process. For lower risk bonds, it will actually be possible to apply for and acquire the bond online. Once you’ve found a suitable surety company, you’ll find a quote form on their website. After this form has been completed and submitted, you’ll receive a quote within a short period of time. Keeping this in mind, you must meet the bond requirements and personal credit scores that make you eligable to receive the bond without any further underwriting.

 

If you find that the quoted price is reasonable and will easily fit into your budget, you’ll be able to go ahead and pay the initial upfront cost. From there, you’ll be able to sign the bond contract and the surety will begin working to process the bond and will eventually mail it to your physical address. Some may also give you the ability to print the bond directly from your computer. Just remember that some bonds will impose a stricter qualification process, so the duration may drag out a bit longer.

 

Overall

 

It is vital to know that there is truly no universal time frame for acquiring a construction bond. The procedure and length of the process will deviate from Canadian Surerty Bond company SuretyKings to the next and may depend on the risks involved. Just remember that it is best to bide your time and shop around, so you can acquire a lower cost.


Surety Bond Requirements And Personal Credit

Understanding Surety Bond Requirements And Credit Necessities

Many contractors may not realize the fact that credit can play a big role, when it comes to surety bonds. Underwriters look at your credit score as your ability to follow through on your commitments. If you have a bad credit score, you are going to be classified as a “high risk” company. Unfortunately, this may make it very hard for you to acquire a surety bond. Below, you will learn more information about how credit can play a role in surety bonds. If you are still not sure about something, contact us right away!

 

Why Credit Matters

Of course, there are many different factors that play a role in acquiring a surety bond. However, credit score is a major factor that can make a huge difference. If you are not able to pay off you debts on time or fulfill a development project, this makes your look irresponsible. However, if your credit is in good standing, you are going to be seen as a responsible company.

If you are labeled as a “high risk” company, you will have to apply for a bond through a non-standard bond market. Do not worry, because even with bad credit you will still be able to acquire a surety bond, but the process will be much more strenuous.

 

Annual Premiums

The major difference between a good and a bad credit score, in the terms of bonds is going to be the premium payment. The premiums for a company with bad credit are going to be much higher than if you have good credit. This is basically the same process for someone who is applying for a loan.

 

Lower Premiums

It is a possibility that you can lower your premium, even with bad credit. You could do this by presenting strong cash and liquid asset verification. Strong personal financial and business statements can also assist in lowering your premium. If at all possible you need to try to increase you credit score, before applying for a surety bond.

 

Compare Shopping

If you already know that your credit scores are low and not satisfactory for low percentage rates, you should do a bit of compare shopping. You can do this by using the free quote form, which can be found on various surety company websites. Just complete and submit the form to find out what type of percentage rate the surety is willing to offer you.

If you have previously dealt with a surety company, you should continue to do business with them, especially if the relationship ended on a positive note. The surety company will be familiar with your business ethics and may potentially offer you a suitable rate


Construction Surety Bonds vs Contractor's Insurance

What Is The Difference Between A Surety Bond And Contractors Insurance

 

Surety bonds can be very confusing, even business professionals that apply for surety bonds oftentimes find themselves confused, as to why they are applying for the bond. In fact, in many cases people confuse Canadian surety bonds and contractors insurance for the same thing. Unfortunately, it is a little bit more complicated than that. These two securities are not the same and it is very important that you understand that. Below, you will learn more information about surety bonds and contractors insurance.

 

Why People Get The Two Confused?

The fact that surety bonds are issued by insurance companies is probably what confuses most people. Another confusing thing is that both surety bonds and insurance coverage allow wronged consumers to collect reimbursement. However, the circumstance in which reimbursements are collected is completely different.

 

The fact that claims can also be filed on surety bonds and contractors insurance does not help to clear up matters. As you can see, it would be very easy to confuse these two entities.

 

How Do Surety Bonds Work?

 

The main purpose of a surety bond is to prevent unethical or illegal business practices. Basically, a surety bond will protect a customer from getting taken advantage of. Before a surety bond is even issued, there will be a lengthy review performed on the company that is applying for the bond. If any company fails to meet any of the requirements, they will not be issued the bond and will not be able to move forward in their business obligations. Read more on what these bonds cover.

 

Contractors Insurance

 

Becoming a contractor can be great, because you will have more control over your schedule and set your own rules and regulations. However, if you are thinking about becoming a contractor, you will be required to get insurance. This insurance will protect you against any liabilities that arise on or off the job site. There are several different types of contractors insurance available that protect you against different liabilities. It is imperative that you understand what this insurance covers. Below, you will learn more information about contractors insurance.

 

Liability Coverage

 

When you purchase liability insurance, you will be protecting yourself against a lawsuit or other damages that might occur. It is important that you know that liability insurance can be customized to protect your company against possible dangers that might arise. With this insurance, if an event takes place, the contractor will be required to pay what is called a deductible and the insurance company will take care of the rest of the cost.

 

Damages to the Structure

 

Structural damage is oftentimes covered under a liability insurance plan. This is a great benefit, because contractors often find themselves working inside of residential and commercial establishments. While working inside of a home or business, there is a high risk of something getting damaged. For instance, you could accidently bump into a priceless vase, while you are carrying a heavy piece of equipment through the customer’s home. When an event like this takes place, the insurance company will reimburse the customer for the full price of the vase or have it repaired.

 

Personal Injuries

 

Liability insurance can also help pay for medical bills that might arise throughout the jobsite. For instance, if you are working off a ladder and drop a hammer that hits the customer in the mouth, the insurance company will pay for the medical costs. If a lawsuit is filed, the insurance company will also help pay for any legal bills that might arise.

 

Other Types of Coverage

 

Contractors liability insurance can also help pay for damages that are the result of an accident. For instance, say that you are trying to cut out a sheet of drywall and accidentally hit a water line. This could cause a significant amount of water damage in and around the home. Of course, in this event, the contractor is going to be at fault, but the insurance policy would investigate and evaluate the damages, then reimburse the customer for the repair costs.

 

Conclusion

 

As you can see, there is quite a bit of difference between surety bond and contractors insurance. However, each can be very beneficial to different parties in different situations. As a customer or business owner, it is very important that you understand the differences between each, so that you know, which one will help you in your time of need.


Understanding The Requirements

If you run a business within Canada, you’ve likely come across a situation that has required to you acquire a surety bond. On the flip side, even some consumers will need to obtain a bond for a handful of personal reasons, especially those pertaining to lawsuits and court trials. Some individuals feel that this is nothing more than a money grab put in place by the government to increase their yearly revenue. The truth of the matter is that there are plenty of viable reasons that surety bonds are required. In fact, a handful of the most prominent will be explained below.

 

Eliminates Court Backlogs

 

In order to fully understand the requirement of the surety bond, you need to look at each individualistic bond. Take court bonds as an example. There are a handful of bonds related to the Canadian court system and most of them are required to help prevent the courts from becoming overwhelmed with trials. By making court related bonds necessary, it is possible to prevent unserious individuals from filing suit against a corporation or individual. If everyone were able to file a suit for whatever reason they felt necessary, it would take years and years for any trial to reach a conclusion.

 

Therefore, the requirement of court bonds helps to keep the court systems in Canada efficient.

 

 

Ensures Court Appearance

 

Although not every Canadian is familiar with contract bonds and bid bonds, most of them have heard about the notorious bail bond. You should already know that the bail bond could be a lifesaver, during your time of need. The bond helps you escape jail for a period of time, but it also provides the government with a guarantee. With the bail bond, you are agreeing that you will show up to court, after you’re release. If you fail to do so, your bail amount will be lost. As you can see, this bond is a requirement for those that wish to spend their time outside of jail, while awaiting trial. If the bond weren’t required, most people would sign out and never show up, which would most certainly lead to an increase in crime throughout Canada.

 

Protects Someone

 

The mass majority of Canadian bonds actually protect someone, whether it is an individual, company or the general public. The Guardianship Bond is a perfect example of this. The bond helps to guarantee that a minor, someone elderly or a disabled individual receives the proper care that they deserve, without being taking advantage of financially or physically. Everyone, who desires to become the guardian of another individual, will be required to obtain the bond and it’ll help to protect the normally defenseless from abuse.

 

On the other hand, the performance bond is another type of bond, which provides protection to an individual. Of course, this type of bond offers protection from a contractor’s bad performance. Contractors are typically required to obtain and submit performance bonds, before they’ll be able to carry out a project. The bond protects the project owner and helps to ensure that the contractor fulfills their duties. If the bond wasn’t necessary, anyone could start their own construction company and could begin acquiring the rights to projects, regardless of a dismal performance and there wouldn’t be any repercussions.

 

Public Risks

 

If your company falls within the “high risk” category, you will need to apply for a permit and license. There are several different types of business operations that fall within this category, since they involve potential risks to the public. A permit bond is put into place to protect consumers from financial loss, fraud, and incompetence. Sales, manufacturing, product distribution, and service providers are the operational areas that governments are continuously monitoring and regulating.

 

These businesses will also need to be licensed and meet all the provincial laws and regulations.

 

Alcohol and Tobacco Sales

 

The Canadian government works diligently to regulate all businesses that sale alcohol and tobacco products to the public. This is absolutely necessary, because of the high risk of fraudulent activities involves in these types of businesses. If your company falls within this operational category, you will need an excise bond. This can also include distributers, manufacturers, exporters, and importers of these heavily regulated products. If you are unsure, whether or not you need an excise bond, be sure to visit your local CRA office (Canada Revenue Agency) or website.

 

Conclusion

 

The truth of the matter is that surety bonds are incredibly important for various reasons. They can protect the public, a company or a specific individual, while also ensuring that a transaction or project is completed smoothly. Therefore, the requirement for surety bonds is very reasonable!


Exploring Various Surety Bonds And Precisely What They Cover

Why Surety Bonds are Important

 

Although consumers are often oblivious to it, the government and court systems of Canada operate consistently behind the scenes. When a consumer or business is forced to interact with a governmental agency or file a suit in court, it is highly likely that they’ll need to acquire some type of surety bond. Many Canadians are unfamiliar with surety bonds and their specific purposes. This is incredibly bad, since bonds are utilized for an enormous number of purposes and they cover innumerable things. Within this guide, you’ll learn about some of the most common bonds of Canada and precisely what they cover.

 

Construction Related Bonds

 

There are hundreds of different construction companies, contractors and subcontractors operating in Canada. These entities are required to make full use of constructions bonds, in order to acquire jobs. The specific bonds that they utilize govern their unique duties and help to protect the clients that they work with. Below, you’ll learn about a few construction bonds and what each covers.

 

 

  • Bid BondsContractors, who wish to place a bid on an open project, utilize the bid bond. The bid bond protects the project owner, by guaranteeing that the selected contractor will follow through with their responsibilities and will obtain the necessary performance and payment bonds.

  • Performance BondsThe performance bond also covers the project owner and provides them with additional protection. In this sense, it covers the contractor’s performance and guarantees that they’ll deliver a satisfactory result.

 

Of course, construction bonds are simply a minute amount of bonds utilized within the country of Canada. While construction bonds primarily cover project owners, contractors and subcontractors, other types of bonds cover other industries and different groups of people.

 

Court Bonds

 

Whereas construction bonds are crucial for those within Canada’s construction industry, court bonds directly impact the country’s court systems. With court bonds, the court system and the individuals or companies involved in a lawsuit are typically covered. Of course, each unique type of bond is different and the specifics will vary enormously. Below, you’ll learn about the specific protections offered by a few different types of court bonds.

 

 

  • Appeal Bonds – In order to file an appeal within Canada, it is almost always required that you obtain an appeal bond. The bond covers the appellate system and helps to prevent abuse. It also offers protection to the individual or company on the other side of the appeal, by guaranteeing that the appellant will pay the original judgment, if they lose their appeal.

  • Fiduciary Bond – This is one of the most common court bonds utilized in Canada. This bond covers the behavior of someone, who becomes responsible for overseeing an elderly person’s belongings and finances. The bond prevents abuse and protects the elderly or disabled individual, who is no longer to care for his or her own assets.

 

Wrapping It Up

 

All in all, there are many different types of surety bonds and each of them covers something different. In order to find out precisely what is covered, it is vital to get detailed information about the specific bond in question.

 

If you want to read a detailed guide on what surety bonds are and the purpose in service in the Canadian market, click here now.


How much do Surety Bonds Cost in Canada?

Exploring The Question – What Do Surety Bonds Cost?

 

As a building contractor or developer, you will want to be able to ensure all of your clients that you are responsible. Of course, your clients may want this guarantee in writing. This is where the surety bonds by SuretyKings will come into play and once it signed by all involved parties, it will become a legal document. Below, you will discover the answer to the question, “What do surety bonds cost” and so much more.

 

Laws of Canada

 

If you are a new contractor, you will need to speak with your attorney or Canada Revenue Agency. These sources will provide you will all the information you need regarding surety bonds. The CRA agent can help steer you in the right direction, so that you can stay current with the legal acts.

 

Cost And Deviation

 

As someone, who must invest in surety bonds, it is vital to take the time to learn about the potential costs. The truth of the matter is that the cost is anything, but universal. In fact, it is very unlikely that two individuals will be able to acquire an identical price. There are a handful of variables and each of them will deviate the price in one way or another. However, you should know that the cost is simply a percentage of the finalized bond amount. Below, you’ll discover a breakdown of some of the key factors, which will help to determine your final fee.

 

  • Your credit score

  • Type of bond in question

  • Business history

  • Your surety company of choice

  • The total cost of the bond

 

The surety will analyze each of the factors above and provide you with a total.

 

Your Line Of Work

 

Another factor, which can cause the premium to fluctuate, is your specific line of work. Some business industries are considered to be much more risky than others. If you operate a business in a high-risk industry or sector, you will most likely be required to pay higher fees, regardless of your individualistic business history. Although this may not seem fair, it is simply how the bond market works. Thankfully, there are a few things you can do to offset the expenses to some degree. These things will be examined a little closer in the paragraphs below.

 

Tips For Acquiring The Best Rate

 

In order to ensure that your company will be able to generate bigger revenue, it is truly imperative to try and pay less for your bond. The good news is that there are ways to lower the fees. First and foremost, you will want to do your best to keep your personal credit in pristine condition. This variable is truly one of the most important and all surety companies will put a lot of credence in your credit score. By keeping an immaculate personal credit history, you’ll be able to minimize your costs.

 

At the same time, you should do your best to establish a lengthy and reputable business history. It is essential to make sure that your company’s reputation remains unblemished. Make sure that you avoid complaints, debts and lawsuits. Companies, which have been histories, will be much more likely to acquire lower prices.

 

Finally, you need to go above and beyond to research the various surety companies. Each is different and one of these companies will be able to provide you with a lower fee than the rest. Search around and acquire an abundance of quotes. Put in the effort and you’ll be able to find the most generous price possible and this will help your business flourish, while ensuring that you are able to acquire the needed bond.

 

Bad Credit Concerns

 

Many business owners will be seriously concerned about their credit scores. As already mentioned, your personal credit will play a vital role in determining your premium. However, there is some good news for those with bad credit. Although you may need to jump through additional hoops, it is more than possible to acquire surety bonds with terrible credit. Of course, this will depend extensively on the type of bond in question. Generally, those with bad credit will still be able to acquire license bonds, fidelity bonds and contract bonds. Court bonds may be a little more difficult.

 

Just remember that the surety will use your credit score to judge you and your final premium will be directly impacted by this figure. Therefore, those with flawed credit scores can expect to pay higher fees.

 

Overall

 

There are innumerable people within the country of Canada that do not fully understand surety bonds. This is especially true, when it comes to the costs of bonds. The truth of the matter is that there is no set price. Instead, each consumer will be required to pay something unique, which will be based on a handful of factors. Therefore, it is truly impossible to determine the price you’ll pay for a specific SURETY BOND, without speaking directly with a surety company!