Secrets of Bonding #105: Choose Your Partner!

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Need a bond?  Talk to the Pros!  856-304-7348

Brokers protected.  Contractors welcomed.

When the music starts you take your partner by the hand and head for the dance floor!  Click now for mood music, “The Virginia Reel, 1953”

When it comes to Surety Bonds, how do you know which partner to choose? Which bonding company fits the project at hand?  Here are some tips: Square D 3

Federal Projects

These contracts require a bonding company pre-approved by the Treasury Department to issue bonds with the federal government as obligee. Federal projects include all contracts with a branch of the federal government such as the Army Corps of Engineers, Office of General Services, Dept. of Veteran Affairs, and the Federal Aviation Administration.  This a big area of activity with 38,786 contracts listed online as of this writing.

The bonding company must be listed / approved, and for a sufficient amount (equal to or more than the contract in question). Circular 570 is issued annually by the Treasury Department aka the “T-List.”  Click for the T-list

The rules pertaining to federal contracts are found in the Federal Acquisition Regulation (called “the FAR”). Click for the FAR

Fine points regarding federal contracting: HUD is not a direct federal agency, and makes their own rules.

Square D 1Any other project owner may CHOOSE to require the T-list as a means of screening the bonding companies. You need to review the project’s written bonding requirements to determine this.  It could say that “a T-listed surety must be used.” It could also require that the T-list amount be equal to or greater than the contract in question.

State and Municipal Contracts

The most common requirement is for the surety to be licensed in the state where the work is being performed.  Many sureties do not find it worthwhile to maintain licensing in all 51 states. *  To check for a specific state, you can go the local insurance department, the surety may list this info in their web site, and it also appears in the T-list details (if the surety is on the list).

Private Contracts

This category includes all non-public commercial contracts, such as a general contractor building an office for a private company. It also includes all the subcontractors such as electricians, plumbers, roofers, etc.  All subcontracts are private even if they are performed on a federal or state projects (because they are not “prime,” not contracted directly with the public entity.)

In this group you may find that a T-list requirement is indicated, or the project owner may choose to be more open.  They can make or waive such requirements at their sole discretion.

Contract specifications may also stipulate a certain A.M. Best rating.  Simply look up the surety to determine if they have a rating, and if it meets the requirement. Click for A.M. Best 


No two bonding companies have exactly the same credentials.  The common areas to consider are:

  • T-listedSquare d 2
  • T-list amount
  • State licensing
  • A.M. Best rating (size and financial strength)
  • Underwriting appetite
  • Excluded classes
  • Excluded geographic areas (Canada?  Mexico? Overseas?)
  • Excluded jurisdictions (New York City?)

Picking the right partner is step one.  If they will not be accepted as surety on the project, move on! 

Hmmm… how about that wallflower over in the corner?

* 50! Just wanted to see if you are paying attention.  (:^D)

About Us: Bonding Pros is a surety specialist that has focused exclusively on bonds for contractors since 1972.  We’re getting pretty good at it!

We work with insurance agents as their “virtual bond department” and also directly with contractor clients. If you need a bond, we have the markets and expertise to get things done – even when others have failed.  

Talk to the Pros: 856-304-7348

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