Is your Surety Agent’s Slow Response Costing You Business?
As with any type of professional service, there are some standards that, if not met, can cost your business money, such as timeliness. Your surety agent can be a great help to your bonding capacity, securing surety bonds, and planning ahead in your business goals, but what if they’re slow to respond to you? You may not immediately notice, as who considers a surety agent’s response time as costly? Lackluster service perhaps, but how does it cost you business?
Read below and learn how slow responses not only cost you business but what to do if that is the case.
Why a Slow Response Costs
All publicly funded construction jobs in the state of California require bid bonds and not including one will deem your bid non-responsive by the project owner. Depending on the size of the job, collecting the necessary information can take some time, and if your surety agent is slow in getting back to you, that can delay the process of obtaining a bid bond, which may cost you the job if you can’t get it by the bid date.
The same situation is true if waiting for performance or payment bonds following the bid bond. If you haven’t secured them, a project owner will only wait so long for them to be issued before moving on to the next contractor. This can be quite costly as the bid bond can have a claim filed against it for not being issued the other bonds required.
Good Service is Timely
It’s important for there to be a reasonable expectation by contractors for good service and timeliness from their surety agent. Let’s consider a contractor getting bonded and see what a quality response time would be.
A standard bid, performance, or payment bond request should be issued within 24 hours. Of course, this depends on the size of the bond and if the contractor typically has jobs of that size. If there are unusual requirements, like high liquidated damages, a long warranty period, or additional underwriting questions, then you can expect the bond to be issued in a longer period of time. If this is the case, a good surety agent would keep the contractor posted on the progress along the way.
A surety agent who provides quality service knows that when the bond leaves their office, their responsibility doesn’t end. They need to keep their contractors in the loop.
What To Do If Frustrated
If you know your surety agent is being slow to respond and that it’s starting to affect your business, there are a few actions you can take to better the situation, but remember to give them the benefit of the doubt before shopping for a new agent:
- Don’t wait on submitting bid bond requests. Many contractors develop the bad habit of submitting the request after going through the plans, and specifications, and putting their price estimates together. You can use the project owner’s budget or engineer’s estimate for a rough approximation to get the bid bond request going and you’re also able to update the surety agent before the bid if the price is climbing significantly higher than the estimate. As a general rule, surety companies ask that contractors notify them if their bid is going to be more than 10% of the price that the bid bond was approved at. Once you’ve decided to bid on a job, submit the bid bond request.
- Talk to your agent and voice your concern about their responsiveness. Ask them about a standard turnaround time for issuing bonds, and if they are unable to answer or they say more than a couple of days, it may be time to look for another agent.
- If the agent promises to do better with communication in a timely manner, pay attention to whether they improve their service and continue consistently. In many cases, the agent’s company may be too small, and they simply don’t have the resources to issue bonds in a timely fashion. Other times, if they’re an insurance agent, they may not understand the deadlines and pressures a contractor faces due to their professional focus being on insurance.
Here at CSBA, we understand the pressures and difficulties contractors face because surety bonds are our entire professional life. We’re committed to providing quality and consistent service to California contractors so you can focus on your business rather than on your surety bonds. We guarantee to issue all routine bonds within 24 hours, are upfront regarding challenges you may face, and help develop a roadmap to grow your contractor business. The surety bonds issues are tracked to ensure timely delivery and have prepared plans to remedy any undelivered bonds, as well as committed to a same-day responses for calls and emails.
We’re proactive because we don’t believe a contractor should have to micromanage surety agents. Slow response isn’t a phrase in our vocabulary.
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