Surety Bonds for Florida Businesses

Business Insurance for Surety Bonds

Surety Bonds are three-party agreements that guarantee your business will fulfill specific obligations. The surety company guarantees to the obligee that your business will meet contractual, regulatory, or statutory requirements. Unlike insurance that protects your business, surety bonds protect others from your failure to meet obligations. Surety bonds are essential for contractors bidding on projects, businesses obtaining licenses, and companies required to provide financial guarantees for performance or compliance.

Why Your Business Needs This

• Many Florida contractors are legally required to be bonded before they can bid on or perform work
• State and local licensing authorities require bonds for numerous business licenses and permits
• Project owners and general contractors often require bonds as a condition of awarding contracts
• Bonding demonstrates your financial stability and commitment to completing obligations
• Without required bonds, you cannot legally operate or compete for valuable contracts

What It Covers

Surety bonds guarantee various types of obligations depending on the bond type. Contract surety bonds guarantee project completion, payment to subcontractors, and adherence to contract terms. License and permit bonds guarantee compliance with regulations and protect the public from financial harm. Court bonds guarantee obligations in legal proceedings. Fidelity bonds protect employers from employee dishonesty. If you fail to meet bonded obligations, the surety company investigates the claim and may pay damages to the obligee up to the bond amount. You are then obligated to reimburse the surety company.

What Are the Main Types of Surety Bonds?

Contract surety bonds include bid bonds guaranteeing you'll enter into a contract if awarded, performance bonds guaranteeing project completion, and payment bonds ensuring subcontractors and suppliers are paid. Commercial surety bonds include license and permit bonds required by government agencies, public official bonds for elected or appointed officials, and fiduciary bonds for trustees or executors. Court bonds include appeal bonds and injunction bonds. Each bond type serves a specific purpose in guaranteeing different obligations for Florida businesses.

How Do You Qualify for Surety Bonds?

Surety companies evaluate your business creditworthiness, financial strength, and experience before issuing bonds. They review your financial statements, credit history, work history, and sometimes your personal finances. Your bonding capacity depends on your financial resources, backlog of work, and track record of completing obligations. Strong financials, good credit, and proven experience improve your bonding capacity and rates. The Gordon Agency works with surety markets to help Florida businesses obtain the bonds they need at competitive rates.

How Much Do Surety Bonds Cost?

Bond costs are typically a percentage of the bond amount, called the bond premium. Rates vary based on the bond type, bond amount, your creditworthiness, and your business financials. Contract bonds for construction typically cost between one and three percent of the contract amount for qualified contractors. License bonds often have minimum annual premiums. Better credit and stronger financials result in lower rates. Unlike insurance, you don't get premium refunds when bonds expire since you're paying for the surety's guarantee during the bond period.

What Happens If There's a Bond Claim?

When someone makes a claim against your bond, the surety company investigates to determine validity. If the claim is legitimate, the surety may pay the claimant up to the bond amount. However, you are ultimately responsible for the loss. You must reimburse the surety company for any amounts paid on claims plus investigation costs and legal fees. This is a critical difference from insurance. Claims against your bonds can impact your ability to obtain future bonding and may require you to provide additional collateral for existing or new bonds.

How Does The Gordon Agency Help with Bonds?

The Gordon Agency has relationships with surety markets to help Florida businesses obtain required bonds. We understand the underwriting process and can help you present your business favorably to surety companies. We assist contractors in establishing bonding programs that grow with their business capacity. We help businesses identify which bonds they need for licensing and contracts. Our experienced agents guide you through applications and work to secure competitive rates for all your surety bond needs.