Bonds Insurance

About Surety & Fidelity Bonds

Federal bonding requirements took shape in 1894 when Congress passed the Heard Act, forcing contractors on public works to post guarantees so taxpayers were protected if a builder failed to perform.¹

Congress replaced that law with the Miller Act in 1935, and it still requires prime contractors on most federal projects over $150,000 to furnish performance and payment bonds, a structure every state copied with its own "Little Miller Act" so suppliers and labor stay whole when a contractor defaults.²

In 1971 the SBA launched its Surety Bond Guarantee program to back emerging contractors, and today NASBP's e-bond standards let agencies exchange sealed powers of attorney, digital signatures, and delivery receipts in minutes, keeping fast-track bids on schedule.^3,4

Coverage Highlights

Surety and fidelity bonds transfer performance, payment, and dishonesty risk to an insurer-backed guarantor, so public owners, regulators, lenders, and beneficiaries can rely on written promises.

• Bid, Performance, and Payment Bonds: Ensure contractors honor accepted bids, complete projects, and compensate labor or suppliers, so a municipality can recover costs if a builder walks away mid-job.¹
• License and Permit Bonds: Satisfy statutory requirements for trades such as auto dealers, mortgage brokers, or electricians, allowing authorities to penalize violations without revoking a compliant business's ability to operate.²
• Court and Probate Bonds: Protect estates and contested assets by backing executors, guardians, or receivers who manage finances under judicial oversight.³
• ERISA & Fidelity/Dishonesty: Reimburses plans or clients when an employee embezzles contributions or forged checks, keeping fiduciaries compliant with Department of Labor bonding rules.⁴
• Supply and Maintenance Bonds: Guarantee that materials arrive and warranty obligations continue after completion, so an owner can source replacements if promised equipment never ships.⁵
• Electronic & On-Demand Bonds: Provide sealed digital bonds with embedded power-of-attorney credentials for DOT portals and private eProcurement sites, cutting courier delays and last-minute bid stress.⁶

Rising Costs

Construction input costs remain stubborn: Associated Builders and Contractors reported in June 2024 that overall materials were 2.8% higher year-over-year, with steel mill products up more than 10%, so fixed-price bids can erode quickly and trigger surety claims when a subcontractor fails.¹ Engineering News-Record adds that 2024 mega-project funding is pushing sureties to scrutinize working capital, backlog quality, and supply plans before approving higher single-job limits.² Meanwhile, the FBI's 2023 IC3 report logged $2.9 billion in business email compromise losses, underscoring why fiduciary and ERISA bonds are repricing for cyber-enabled theft.³

Cheaper Premiums

• Deliver CPA-ready packages: The SBA stresses that current financial statements, work-in-progress schedules, and bank references shorten underwriting cycles and keep rates in preferred tiers.¹
• Meet with your surety team year-round: NASBP recommends regular reviews of backlog, continuity plans, and succession so aggregate limits can expand without surcharge.²
• Leverage SBA guarantees or co-surety: When growth pressures capacity, layering SBA guarantees or co-surety keeps bids moving without jumping to higher premium brackets.³
• Adopt e-bonds early: NASBP notes that digital seals and bid submissions reduce courier downtime and late deliveries, which sureties reward with better terms.⁴

What We Do

We assemble submissions with audited or reviewed financials, personal indemnity, WIP schedules, bank references, and/or internal control memos, so surety underwriters see exactly how your jobs are funded and managed. That transparency helps set realistic single and aggregate limits before bid day.