Bonding Limit

I have a couple of projects that we would like to bid on in the $300,000 range that are asking for $50,000 performance bonds. Our current bonding company says our aggregate limit is $500,000.00. Will the performance bond be based on the $300,000.00 contract price in which case we can't get both projects or $50,000 bond requirement?

First of all, if you are asking that question on here, you have a problem. You should have a good surety guy who you can talk to and ask him and/or should have met with the underwriter and be able to ask the underwriter also.

That being said, typically the surety extends a line of credit based on total work program, bonded and unbonded. They will give out two numbers, the first being the single job size they are willing to write for you and the second being the aggregate backlog they are willing to go up to. Again, typically,this is bonded and unbonded. On somewhat rare occassions, they will give out a bonded aggregate.

Some contractors dislike filling out a work in progress report, but keep in mind that typically, your cost to complete on your work is what is used to determine where you stand with the aggregate limit the surety has for you. Therefore, the more up to date you keep your surety, the better... as you work off the work, you open up some of your aggregate.

One last thing as to your work on hand ... if you have T & M work, make sure you point that out to the surety as true T & M work will not be 'used against' you like fixed price work.

Again, you should talk to your bond agent and/or underwriter and determine what they are willing to do for you so that you can make good management decisions in running your business. A good workiing relationship with them is important in normal times and extremely important in these more conservative surety times.

[Surety Guy]

Originally Posted by Unregistered

First of all, if you are asking that question on here, you have a problem. You should have a good surety guy who you can talk to and ask him and/or should have met with the underwriter and be able to ask the underwriter also.

While I agree your current bond agent should be able to explain all of this to you, I disagree that asking questions on our forums is a problem. The Surety Bond Forums are a free source of information with agents, underwriters and attornys as members to help answer questions. If I were a contractor I would most certainly make sure I am getting sound advice from my current agent, which is a perfect match for our forums.

Unregistered, you gave a good explanation and we appreciate your input. However, we still would like you to register with a username so it is easier to distinguish who is who. We are able to see your internet IP address, so what is the big deal about registering so we can have a name to refer to you by?

You can register at: http://forums.jwsuretybonds.com/register.php?

Wasn't inferring that this isn't a good place to ask a question, was inferring that he needed a better relationship with his bond agent. Or perhaps he needs a bond agent as opposed to an insurance agent who happens to write some bonds for him! I guess it came across the wrong way.

I am registered, i don't remember my login name most of the time, don't really see where it matters.

Certainly not hiding from anyone!

[Surety Guy]

My mistake. Now that you have elaborated, I couldn't agree more!

Many insurance agents will offer to obtain bonding for contractors just to make sure they still write their insurance. I understand it is a nice convieniance for the contractor, but if they are serious about using suretyship to help their business grow it is usually best to work with a bond agent directly. Often the insurance agents broker the business to a bond only agency since they do not have the markets nor the expertise to place the contractor with the best possible program.

If you are working with a bond agent, then the agent should be able field the questions you presented; it is something that should have been explained to you when your bond line was set up (sometimes sureties use different systems to calculate how much bonding capacity you have left of your bond line w/ your current work on hand.)


Unregistered, we simply prefer to have a name for users that regularly participate. Otherwise there are several people talking w/ the name 'Unregistered' at the same time. Feel free to contact an administrator by email to obtain your password, just be sure to mention your username.