Transitioning from FastBonds to a Standard Bond Program

This post is part of a series sponsored by Old Republic Surety.

Especially now, at the leading edge of the post-pandemic construction boom, your agency’s contractor clients may need to increase their bonding capacity to take on more and larger projects. Here’s advice you can share with them now to help them get ready.

Many contractors that historically have needed only small and infrequent contract bonds have utilize abbreviated underwriting programs, such as Old Republic Surety Company’s FastBond program. The underwriting of such programs is based largely on the credit scores of the applicant and owners, and requires much less information than is required to qualify under a standard bond program for larger contracts. Here are some important reasons why a contractor would want to transition from a FastBond type program to standard contract bond program — and how to get that started.

• The cost of the bond itself. FastBond programs are designed for a contractor that has occasional bond needs, and FastBonds are typically charged higher rates. Old Republic Surety writes FastBonds up to $1.5 million aggregate, generally at a $30/thousand rate. (As of the date of this article). Standard program rates are often significantly less, enabling the contractor to tender more competitive bids and possibly earn better margins on their work.
• The contractor wants to grow. Any contractor wishing to grow and take on larger projects of longer duration will need to convert to a standard bond program.

Standard bond programs require more sophisticated financial information and cost systems. A contractor can increase their bonding capacity with a standard bond program by following these key steps:

• Unannounced job site inspections.
• The use of approved contract forms.
• Proper documentation of change orders.
• Proof of insurance for all subcontractors.
• Protection of assets such as equipment and materials.
• Written safety policies to minimize job site hazards.
• Incentives that reward employees for bottom-line profit.

Old Republic Surety prides itself on taking a consultative approach with contractors who are willing to follow the proper steps to increase their bonding capacity. We will give you the advice you need to take your bonding program to the next level. Contact your bond producer for more information, or contact us and we can connect you with the best bond producers in the business.