Why do I have to sign personally?

[Unregistered]

I have been told that I will need to sign personally in order to obtain a surety bond. Do the company's assets have anything to do with obtaining this bond, or is it always based on personal credit?

[Admin]

I have been told that I will need to sign personally in order to obtain a surety bond. Do the company's assets have anything to do with obtaining this bond, or is it always based on personal credit?

It is extremely rare to obtain a surety bond without having to personally indemnify. Large contract accounts can obtain bonding without personal indemnification, however it is extremely rare. Commercial bonds can be written without personal indemnification under "special bond programs". These programs are far and few in between, but they are out there for certain classes of business. Our agency has the ability to write New Jersey Used Car Dealer Bonds without any indemnification, but the program is limited to our agency only. A spouse can get out of signing if there is a prenuptial agreement between the couple separating him/her from the business ownership. To sum it up, you will almost definitely have to personally indemnify, as well as your spouse, and you will have to sign on behalf of the business as well.

Every surety has different underwriting guidelines, but they are all pretty similar. The underwriters look at personal credit of the owners, the personal financial statement of the owners, and the strength of the business financials.

Most of my underwriters only require business financials for bonds $50,000 and larger. However, there are exceptions to this, as ICC Bonds (a high claim rate class of business) require business financials and they are only a $10,000 bond (if you don't want to have to provide collateral, or in effect be partially bonding yourself).

The sureties also care less about personal credit and more about the personal financial statements and business financial statements as the bond size increases.

I tried to cover all bases for you, hopefully it wasn't too confusing. If you are at all confused, please tell me more about the bond you are trying to obtain and I will let you know what the surety will want to see.

[mrbond]

You're asking the surety to guarantee that your company is going to perform appropriately. Why should the surety be willing to guarantee this if you aren't?