Tips For Getting The Lowest Surety Bond Rates
How to get low Surety bond rates
Construction contractors in Canada will eventually need to obtain surety bonds. It is downright impossible to be able to work in Canada as a contractor, without knowing how to get bonds. Bonds are needed when you first place your bid and before the project begins. While there are numerous things to contemplate, the mass majority of construction contractors will focus solely on the cost. Unfortunately, surety bond cost is somewhat of a tricky subject, without any uniform answer. Within this guide, you will be provided with information regarding the cost and tips for keeping it to a minimum.
No Universal Answer
When it comes down to it, contractors will need to come to terms with the everchanging nature of surety bonds. The sad truth is that the price is never the same. If you have colleagues in the construction industry, you should not expect to pay the same price as these individuals. Also, you will need to expect the price to change from one project to the next. When switching to a new project, you will most likely be required to pay a different amount. Nonetheless, there are ways to predict the price, while also taking steps to keep the fees to a minimum.
Understanding The Factors Involved
Now, you should take the time to familiarize yourself with the factors related to the price of surety bonds. The truth of the matter is that the surety provider will charge an amount based on a handful of different factors, including your company history and credit score. Also, the project at hand and the value of your bid will also be taken into account. Finally, you should realize that each surety provider will be different. Some are more apt to charge higher fees than others. Therefore, the only definite way to determine the accurate cost is by submitting an application and obtaining a quote from our company.
Many construction contractors will be enormously busy and they may not have time to spend sitting on the computer. This is entirely understandable, but it is still in your best interest to set time aside for shopping around. Shopping around will give you the ability to compare the fees offered from several different companies. Obtain multiple quotes and utilize the information provided to find the most generous fees possible. We sincerely believe that we offer the most affordable fees in Canada. Nonetheless, we encourage all Canadian contractors to shop around.
Maintain Your Reputation
A company, which has a poor reputation, will be much more likely to pay more than others. Each surety provider will carefully analyze your company’s background, in order to provide you with a cost estimation. With this in mind, it is pertinent to make sure your company stays out of trouble. It is safe to say that you already do everything humanely possible to keep the client satisfied. This is good. Also, you should try to consult with the client in the event of a dispute. Preventing them from reaching out to the surety provider or taking the dispute to the courtroom is recommended.
If your company has been sued in the past or has faced multiple surety bond disputes, it is likely you’ll be required to pay more. Stay out of trouble and always focus on satisfying the customer. This will allow you to keep the costs to a minimum.
Underwriters provide consumers with free quotes and if you look closely, you will find the quote form on the main page of our website. The form is laid out in a simplistic manner, requiring the applicant to only answer a few direct questions. You will need to input the bond amount, personal information, bond type and company name. It is important to note that this is not a guarantee of an approval for a construction bond, but only a free quote. The quote is not written in stone, because there are many factors that affect the annual premium. However, the quote should be as near too accurate as possible.
It is always recommended to compare the quote with other quotes, obtained from several sureties. This will provide you with the tools needed to get the most out of your money. Now, it doesn’t necessarily mean that you should choose the company that offers you the lowest premium, because there may be an underlying factor that is driving the price down. Instead, choose a surety company with a high customer rating and outstanding reputation in the community.
Avoid Putting Too Many Projects In Production
Many general contractors will only focus on one construction project at a time. This is the best option, because it will allow you to focus all of your attention and put all of your resources into completing the project in a time efficient manner. You also have those contractors that like to put too many projects in production at once. While this may work well with small projects, it probably won’t work for large projects. In fact, most underwriters will not approve a bond for a contractor, with multiple open projects, because it is too risky.
Improving Your Credit Score
Anytime you are applying for a construction bond, the underwriter will conduct an in-depth background check on you and your company. If your credit score is in ruin, it can greatly increase the cost of your bond, or in some cases it can even prevent you from getting approved. This is why it is always a great ideal to try to improve your credit score, before applying for a bond. However, you should know that there are several different techniques that you can use to improve your credit score before applying for a bond.
As a business owner, there is probably a good chance that you have several different credit cards. Part of your credit score is based on the balances of your credit cards. So, if you have one credit card that has a balance of $50 dollars and another card that has a balance of $100 this is going to greatly hurt your credit score. The best solution to this problem is to gather up all your credit cards and pay off the ones with the lowest balances.
Gain More Experience
Another thing to remember is that your experience in your respective industry will prove to be enormously impactful on your overall price. If your company is new, it is likely you will be required to pay a little more. Proven companies, which have five or ten years of experience, will pay much less. Unfortunately, gaining more experience is easier said than done. Just grit your teeth and stick with it. As your company begins to expand and grow, your experience will increase and this will cause your surety bond costs to drop accordingly.