What Should Contractors Consider When Selecting a Surety?

April 7, 2023

Contractors face a number of considerations when selecting a surety. But perhaps the most overlooked, yet very important, aspect of the surety relationship is claim service.

Claims Services

When a contractor purchases a bond, the contractor is buying claim services. Indeed, in a claim situation, it’s the claims department, not the agent or underwriter, which becomes the surety representative to investigate the claim and carry out the surety’s obligation under the bond. And due to the three-party nature of the bond agreement, the claims representative becomes the face of the interaction, providing service to the contractor as well as the obligee.

Unfortunately, many contractors only become aware of this reality after the fact, learning it the hard way. Dissatisfaction with claim service, or a perceived “bad” claim experience, can be the reason a contractor leaves a surety. But that situation is avoidable.

Relationships Matter

With claims, as in all aspects of surety, relationships matter. In addition to claims handling, claims departments typically provide support to underwriters and perform various value-add services for agents and contractors. Regular interaction with the claims team allows the contractor to utilize various legal-support services, navigate performance and payment situations, and truly maximize the relationship.

Contractors should partner with a surety whose claims department shares the contractor’s values. This includes not only a common sense philosophy with respect to claim handling, but also a business-minded and pragmatic approach to all matters. As with any trusted relationship, communication and transparency are key and can serve to establish and strengthen the relationship over time and ultimately serve to minimize the risk of loss.

For more information about partnering with Merchants Bonding Company, use our Find an Agent tool here.