Protecting Surety Credit For All Through Evaluation

General contractors understand the crucial role subcontractors play in the successful completion of projects. Having the right team in place means projects get done on time and on budget, within a safe working environment. Conversely, the wrong subcontractor choices can result in project delays, cost overruns, and safety incidents, all of which have the potential to impact a contractor's reputation and ability to secure surety credit.

Rely on Sureties for Expertise

One of the most straightforward ways for a general contractor to ensure a subcontractor is qualified is to have the subcontractor bond to them. A surety is then responsible for the thorough reviews and assessments necessary for a subcontractor to qualify for surety credit, providing the assurance the subcontractor is a good risk. 

4 Areas Sureties Consider When Evaluating Subcontractors

  • Past Performance

    Underwriters consider completed projects, client feedback, and adherence to deadlines and quality standards, all of which show a subcontractor's ability and commitment. 
  • Experience and Expertise in Relevant Projects

    Underwriters take into account specialized skills, certifications, and industry knowledge aligning with project requirements which are important indicators of a subcontractor's expertise.
  • Compliance Record

    A subcontractor's adherence to industry standards is evaluated through background checks, license verification, confirmation of insurance coverage, safety records, and their compliance with regulatory standards.     
  • Financial Stability

    Underwriters scrutinize financial statements, evaluate liquidity ratios, and review credit histories. A subcontractor with a strong financial standing is more likely to fulfill their contractual obligations, reducing the risk for the contractor and the surety.

Implementing a Comprehensive Evaluation Process

A comprehensive evaluation and prequalification process is an effective risk mitigation tool. Contractors can establish and rely on their own procedures, or they can require subs be bonded. In that case, the surety assumes the responsibility of prequalifying the subcontractor, using their underwriting expertise to perform the complex and comprehensive reviews necessary to reach a reliable conclusion.  Past performance, experience, compliance, and financial stability, are all evaluation criteria that influence a subcontractor's ability to obtain surety credit, making them a more reliable choice for a general contractor who wants to safeguard project success and their own surety credit. 

How do I get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

All information provided is subject to change.