Bond premiums are normally very straight-forward, but there a couple of things you should look for to avoid surprises. If a job is going to run longer than 12 or 24 months, most sureties will charge an extra amount of 1% per month for each month over their given time limit. If the warranty period is going to be longer than one year, most sureties will charge an extra amount for each year beyond that one year. If the job is determined to be a design/build project, most sureties will have a different, higher premium that they will charge for that additional risk. If you obtain a bond for an annual contract covering an indefinite quantity of work, be sure to understand how the bond costs on that will work for you. It’s possible that you could end up with a real surprise if you do more work than the original bond amount during the year. CPA costs are another bond cost to consider. Be sure to talk to your agent so you understand why a compilation, review, or audit might be required for any given period, and if that level of statement will be required in the future. These are some common “gotcha’s” that could be more than irritating for you. Give us a call if you have any questions understanding an unusual bond charge.
Avoid Surprises in Your Bond Costs
By Cheryl Foley| 2013-07-30T14:54:53+00:00 July 30th, 2013|Surety Blog|Comments Off on Avoid Surprises in Your Bond Costs