Surety Bonds

Construction bonds keep your contract business running smoothly
Contract bonds are guarantees that a contractor will abide by the specifications of a construction contract. A construction bond assures a project owner that a contractor will perform the work properly and pay specified subcontractors, laborers and material suppliers.

Nationwide specializes in serving the needs of small to medium-sized contractors such as electricians, carpenters, masons, plumbers, painters and landscapers. We can bond contractors for up to $5 million projects. Our bonded contractors are usually supported by bank lines of credit, pay their bills promptly and have good customer references.

Contract bond types
There are several types of contract bonds:

Bid bonds guarantee that a contractor will enter into a contract, if awarded, and furnish such contract bonds as required by the contract terms.
Performance bonds guarantee faithful performance of the terms of a contract for construction or furnishing of supplies.
Payment bonds guarantee payment for labor and materials used in the work the contractor is obligated to perform.
Maintenance bonds guarantee against loss because of defective workmanship or materials used on a construction project.
The bonding process
“Bonding” is what we call the vetting process for contractors seeking a contract surety bond. Before a contract surety bond is issued, the contractor is evaluated and qualified to assure the project owner that the contractor has the resources and capacity to perform the contract according to its terms and conditions. 

The financial statements
Many surety companies have stringent financial reporting requirements for contractors, such as requiring contractors to provide CPA-prepared financial statements. In some cases, Nationwide accepts alternate forms of financial statements, such as in-house prepared statements and income tax returns. For new contract bond submissions, we require the three most recent year-end business financial statements and a current year-end personal financial statement for each owner.

The underwriting process
Our unique underwriting approach emphasizes personal and business assets, which means we base our underwriting on the total financial strength of a contractor’s business and its owners. For underwriting, our vetting includes calling a contractor’s banker, suppliers and job references to learn more about their business practices. This background check allows us to provide surety credit without strict reporting requirements. 

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Contract bond types

There are several types of contract bonds:

Bid Bond: This bond guarantees that as a bidder on a contract, you will enter into the contract and furnish the required payment and performance bonds.
Payment Bond: This bond guarantees that suppliers and subcontractors will be paid for work performed under the contract.
Performance Bond: This bond guarantees the contract will be completed in accordance with the terms and conditions of the contract.
Ancillary Bond: This bond guarantees the performance of requirements integral to the contract, but not directly performance related.

Maintenance bond: This bond guarantees against loss as a result of faulty workmanship

The Process:

Before a surety company will issue a bond, they evaluate the contractor to ensure that they are qualified to complete the project and has the capacity to do so accoriding to the project owners terms. 

Surety companies have strict financial reporting requirements for contractors. Most require them to provide CPA-prepared financial statements to ensure the quality of them. However, some make exceptions and allow in-house prepared statements. 

The underwriting process for bonding is focused on both personal and business assets. The underwriter will look at the total financial strength of a contractor’s business by checking the background of the business and its practices. 

Sales Contacts

Thomas Bailey

President

Jeff Smith

Vice President

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