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SURETY BONDS

AHT has years of experience serving the surety needs for a wide variety of clients. We leverage our expertise, underwriter relationships and diverse industry knowledge to ensure that our clients receive the best available surety program. As your surety advisor and underwriter liaison, we stay abreast of your business activities to help you plan your surety needs and to serve as a communicator and negotiator with your surety underwriter. The surety relationships we maintain are based on trust, mutual respect and accountability.

Public & Private Commercial Entities

Construction Industry

Nonprofits

Individuals

WHAT IS A SURETY BOND?

 

A surety bond is a three-party agreement between a principal (bond holder), a surety (underwriter) and an obligee (entity requiring the bond). In exchange for an agreement of indemnity and a premium from the principal, the surety agrees to guarantee the successful performance of the principal to the satisfaction of the obligee, subject to the terms, conditions and language of the bond. A surety agent communicates with all three parties and coordinates the bond.

HOW ARE SURETY BONDS UNDERWRITTEN?

 

Surety underwriters analyze the principal’s three “C’s”: character, capacity and capital. Underwriters seek the following attributes in their principals:

 

  • Trustworthy, reputable and of good character
  • Have the capacity to complete the work guaranteed by the surety bond
  • Have adequate capital to make the surety whole again should a loss occur

WHAT IS A SURETY BOND?

 

A surety bond is a three-party agreement between a principal (bond holder), a surety (underwriter) and an obligee (entity requiring the bond). In exchange for an agreement of indemnity and a premium from the principal, the surety agrees to guarantee the successful performance of the principal to the satisfaction of the obligee, subject to the terms, conditions and language of the bond. A surety agent communicates with all three parties and coordinates the bond.

HOW ARE SURETY BONDS UNDERWRITTEN?

 

Surety underwriters analyze the principal’s three “C’s”: character, capacity and capital. Underwriters seek the following attributes in their principals:

 

  • Trustworthy, reputable and of good character
  • Have the capacity to complete the work guaranteed by the surety bond
  • Have adequate capital to make the surety whole again should a loss occur

COMMERCIAL & CONSTRUCTION SURETY BONDS

COMMERCIAL SURETY BONDS

There’s a common misconception that surety bonds are only for construction companies. While construction companies do utilize significant surety credit, almost every company will need a surety bond at some time. AHT is one of the few insurance brokerages with a surety bonds practice that has professional training and extensive experience in handling the particular surety needs of a wide variety of commercial entities including:

  • Financial institutions
  • Individuals
  • Manufacturers
  • Nonprofits
  • Suppliers
  • Technology companies

Our surety skills and commercial industry knowledge, combined with our premier group of surety underwriters that specialize in commercial surety accounts, enables us to deliver very successful and innovative surety programs. We work closely with underwriters to ensure you receive the best available terms and conditions regardless of the size of your company, or the size of your surety program needs.

CONSTRUCTION SURETY BONDS

AHT is deeply committed to the construction industry. We attend industry events, visit with contractors and subcontractors, and read construction journals to be sure we are always up-to-date with business trends, challenges and developments. We make it our job to understand your business and to make sure your surety underwriter also understands it. They trust our judgement when negotiating on your behalf and work with us to meet tight deadlines.

Whether your firm is a general contractor, a subcontractor, a large company or a small one, we have the markets and the expertise to develop, place and manage your surety program.

Following is a sample list of surety bonds needed by contractors.

  • Bid bonds
  • Labor and material bonds
  • License and permit bonds
  • Mechanics lien — bond to discharge
  • Performance bonds
  • Supply bonds
  • Utility payment bonds

SURETY BONDS VS. INSURANCE – WHAT’S THE DIFFERENCE?

SURETY BONDS

Three-party agreement

NO transfer of risk

NO losses expected

Law of large numbers does not apply

Losses are recoverable

Premium = service charge

Selective underwriting

Terminology: “Principal”

Terminology: “Bond”

INSURANCE

Two-party agreement

TRUE risk transfer exists

Losses are expected

Law of large numbers applies

Losses are generally not recoverable

Premium = charge to cover losses

Most risks written (at an adequate premium)

Terminology: “Insured”

Terminology: “Policy”

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