Difference Between Surety Specialist & Insurance Agent

Contractors sometimes stick with those they’ve worked with in the past, including remaining with their insurance agent to get bonded, without considering whether it is best for their business. It’s understandable to remain with someone you know, but by doing that you’re forgoing the advantages of working with someone who specializes in surety bonds. This is a little like going to your regular doctor to perform heart surgery. With something that serious, you’d probably want the heart specialist, right?

There are a lot of differences between a surety specialist and an insurance agent that can cost you bonds, bids, and the experienced guidance to grow your company. To help you understand the comprehensive level of service a specialist brings to the table, let’s discuss the main differences between working with an insurance agent rather than a surety specialist. 


Different Approaches to Obtaining Bonds

Insurance agents approach their work under the umbrella of risk management, tending to treat surety bonds as no different than an insurance policy. However, surety bonds and insurance couldn’t be further apart and risk isn’t the top priority in getting bonded. Unlike insurance, surety bonds benefit the third party owner or general contractor that you are working for, and they are underwritten by surety companies more like bank loans. By not being well versed in surety, insurance agents can extend your bond process enormously as they are often not familiar with what an underwriter requires from you. It’s fairly common for an insurance agent to simply collect a checklist of items without really understanding it thoroughly and simply send it off to one of the few surety companies they work with, not really knowing if that surety company is the right fit. 

For a surety specialist, they have relationships with key service providers like construction CPAs, attorneys, banks, and surety bond providers. Having access to those professional connections means a surety specialist can match your bonding needs with an appropriate company, while also knowing the nuances an surety underwriter wants or needs information-wise. The approach of a surety specialist is based on singular focus and their ability to gain a deeper knowledge of the contractor’s business, the construction industry, and the best routes to getting bonded.

Essentially, the difference in getting a bond between insurance agents and a surety specialist is expertise. 


The Difference in Background

The difference in approach between a surety specialist and an insurance agent stems from the many differences in their backgrounds, like their education and daily job experience. For a surety agent, they learn more about financial statements, credit, and it resembles banking more than insurance. Their education is primarily in finance and accounting, with an emphasis on construction accounting. Due to a surety specialist’s focus on bonding in the construction industry, they develop a deep understanding of best practices related to job-specific risks, job profitability, and overall profitability for your business. 

In contrast, an insurance agent focuses more on risks related to property, liability, and workers comp. While these things have their place in your business, it doesn’t relate much to getting a surety bond or growing your bond capacity. Instead, it has more to do with understanding exposures and potential liabilities. 

The difference in education and experience makes all the difference when wanting a professional service. You wouldn’t go to an auto mechanic to fix your construction equipment, though both people have mechanical knowledge. 


Advantages of Working with a Specialist

Now that we’ve covered the many differences in background and the route to getting bonded between a surety specialist and insurance agent, what are some of the advantages of working with someone who focuses on surety bonds?

  • Surety specialists have meaningful relationships with surety companies, which helps to match your bonding needs with an appropriate bond provider based on your unique needs. An insurance agent may only work with 8 or 10 sureties whereas a surety specialist like CSBA works with over 35 surety companies. More sureties equals more options.
  • Surety specialists understand surety underwriting and requirements in-depth and are better equipped to communicate with underwriters. 
  • Surety specialists understand construction accounting, it’s the entire focus of their expertise.
  • Due to the deep knowledge a surety specialist has, they are better able to negotiate on your behalf to a surety provider and help create a plan of action to grow your bonding capacity for larger bids.

The advantages of working with a specialist boil down to just that, you’re working with someone whose entire professional life is dedicated to surety bonds in the construction industry. You can benefit from that expertise and the relationships they’ve developed with others in that field. Insurance agents have a different set of specialties that don’t allow them to develop the deep knowledge required for growing your bonding capacity or an efficient bonding process. 


Recommendations and Relationships

The differences outlined above aren’t meant to say that your insurance agent isn’t a trusted source in their expertise, especially if you have a great relationship with them already. They may even know a good surety specialist to direct you to, which is why we at CSBA often work with insurance agents to serve their contractor’s bonding needs. 

Here is what one of the insurance agents we work with says:

If you do want to continue to work with your insurance agent instead of aligning with a surety specialist, here are some questions to ask to make sure you aren’t short changing yourself:

  1. How many surety companies do you represent? 

    If it’s less than 15, ask for a surety specialist.

  2. What percentage of your business is surety bonds? 

    If it’s less than half, ask for a surety specialist.

  3. Do you have a surety underwriter on staff?

    If they don’t, ask for a surety specialist.

  4. What surety associations are they involved in?

    This is important as it speaks to their experience and expertise in the field.

If you don’t get these answers from an insurance agent, it’s best to work with a surety expert. That doesn’t mean you can’t keep your insurance agent for what they do best for you, but bonding shouldn’t be among them. 

We at CSBA are a team of surety underwriting specialists with over 200 years of combined surety experience. We have those key relationships that not only get you the bond you need efficiently but can advise on how to grow and get bigger bids.

We invite you to explore the CSBA difference and experience having an expert partner that is devoted to one thing: your success.

Dan Huckabay
About The Author

Dan Huckabay


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