After the underwriting process is complete and you’ve been informed of the good news – an approval on your bond request – you may be wondering what to do next. Here’s how the process generally works.
The Bond Approval Process
A bond approval means you have passed the bond underwriting process and met or exceeded the qualifications to get bonded. The surety company will then give their agent the okay to issue you the bond on their behalf.
1. Fill Out Forms
If there is a specific form that you must use, make sure that document is in your surety agent’s hands. Or let them know the form you require. The agent will complete the form, attach a seal and a power of attorney, and sign the bond.
2. Sign the Bond
Once you have the bond in your hands, you will also need to sign the bond. We encourage you to double-check that everything is dated and signed and the seals are attached properly.
3. Deliver the Bond
Next, it’s time to deliver the surety bond to the entity requiring it (the obligee). The surety bond will then be active until the expiration date – or until the contract the bond aligns with is complete.
4. Pay a Premium
The surety company will charge you a premium amount that correlates with the risk of issuing you the bond. They will base the premium charge on:
- The type of bond you need
- Underwriting qualifications
- The length of the bond
- Several other factors
You will typically need to pay the premium charge on the spot or shortly after the bond is in force. If this is going to cause a cash flow issue with your business, don’t hesitate to speak with your agent. Ask if they have a premium financing option available to you.
What does it mean to file a claim?
Filing a claim on a bond is a formal process initiated by a party that has suffered a financial loss due to the actions or inactions of a bonded individual or business. The bond, often required in various industries such as construction and contracting, serves as a financial safeguard for clients and stakeholders.
When a claim is filed, it triggers an investigation by the surety company. If the claim is valid, the bond protects the claimant by providing financial compensation for the verified loss, up to the bond’s specified limit. This process ensures there is a level of financial accountability and security, safeguarding parties from potential risks associated with contractual breaches or failures.
Have Questions? ZipBonds Has Answers for You
Many industries require businesses to be bonded, licensed, and insured. If you have any questions about the surety bond approval process, we would be more than happy to help.