Why has my surety bond increased?” It’s frustrating when your bond increases – but there are usually specific reasons why you’ve seen an increase in your bond. Instead, your credit, contract history, or public records may be factors that have upped your bond. Here are the four most common reasons most contractors’ surety bonds go up.

Your Credit Score Has Changed–For the Worse

Your FICO score (or that of whoever signs as the personal indemnitor) is the largest single factor when it comes to the price of your surety bond. If that comes as a surprise, it may be time to check your credit score.

If your credit score has taken a hit when it shouldn’t have, it’s a good idea to review your credit reports for any errors. You might have become the victim of identity theft or credit theft. Or (more likely) someone has simply made a mistake on your score. You can correct these errors by writing the credit review services with details and proof of your real credit history.

Then again, there could be legitimate reasons your score has gone down. If that’s so, talk with your bank about improving your credit score. Your bank may be able to help you raise your score, and will be more reliable than independent “credit repair specialist.” On time payments and a low debt to limit ratio are a good foundation for a strong credit score.

Your credit isn’t the only thing that affects your surety bond, however. Even if your FICO score looks good, other items can affect what you’ll be required to pay.

Adverse Items on Your Public Records

Adverse items on your public records can count against you when it comes to your surety bond, whether or not they affect your credit score. These items can include:

• Unpaid tax liens
• Civil suit judgments
• Wage attachments
• Collection items
• Unpaid or past due accounts
• Bankruptcy

You Have Open or Unresolved Bond Claims

Unfortunately, you don’t have to have an actual judgment against you or your business in order to see the price of your bond go up. If there is currently an open claim or suit concerning a different surety bond, it will likely to affect the one you’re getting now.

While this can seem unfair, keep in mind that in some cases contractors with open issue can’t get a surety bond at all. Until the issue is resolved, you will need to handle the fact that you are temporarily considered “high risk” for new bond.

You Have License Complaints on Your Contractors License

This is another factor that may increase the price of your bond. It’s true that many of these complains can seem (and often are) frivolous. But swatting at them like gadflies is not the best way to deal with them—tempting though it may be.

Even if a complaint seems frivolous or even vengeful, it can affect you financially if it sticks. That’s why it’s important to treat every complaint as though it were a serious one, and do your best to see it resolved. While it may seem like a pain to deal with, doing so can save you a lot of money when it comes to your next surety bond.

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How can you get the best contractors insurance in California for your business? It’s not difficult—but it’s also not as simple as picking out an agency and paying for a policy. You should consider (and maybe reconsider) the amount of coverage you need, as well as the kind of coverage you need. It’s also important to make sure you’re working with the right agency.
Here’s how to be sure you’re getting the right contractors insurance for your needs.

Decide on a Baseline Coverage Amount

One thing many inexperienced contractors don’t fully appreciate is that your policy should cover more than just the size of your project. It’s easy to assume that a $20,000 contract needs exactly $20,000 worth of coverage—no more, no less.

The thing you have to keep in mind is that someone who doesn’t appreciate the $20,000 job you did, might easily claim $200,000 in damages. So it pays to have a thorough policy.

A good rule of thumb is to add up everything your company is worth, and take that as a baseline figure when it comes to a contractors insurance policy. You need more than that amount, but you should never purchase less. Not even for a small job.

Decide Your Other Needs

It goes without saying that you’ll need general liability coverage. But that only covers the most basic of your needs.

You’ll also need a California surety bond if you’re dealing with a public construction contract. Many private construction contracts require a surety bond, as well. Your personal auto policy may not cover your business needs if you’re working on a commercial job, since most private polices don’t cover the amounts needed for commercial jobs ($1,000,000 or more).

You may also need Builder’s Risk insurance, a license bond, or one of several other types of coverage. An experienced California contractor insurance agent is your best bet here.

Shop Around for Your California Contractors Insurance

A lot of people focus on price when it comes to California contractors insurance. And although price is important, it’s not the only important factor. In addition to a good price, it’s also important to find an agent who knows the ins and outs of your industry, who knows what you need (and don’t need) to stay safe, and who has access to plenty of the right carriers.

It’s essential to find an agency that specializes in contractors insurance, instead of just a general agency that claims to offer what you need. A specialty agency will have access to plenty of insurance carriers so that you can get the best deal on the most thorough coverage. They’ll also have good relationships with other clients, contractors, and the industry in general, which will help them serve your needs a magnitude of order better than a general agency.

Even among specialty agencies, some may be better suited to your needs than others. One may have more of the right connections, or you may just have a better gut feeling about your agent. Look for agents that specialize in California contractors insurance, and then decide which one is right for you.

There you have it! With these three steps, you can make sure that you’re finding the right California contractors insurance policy and provider for you.

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On the hunt for a California contractor’s insurance provider? A good contractor’s insurance agency should meet several requirements if you want to make sure they can meet your needs.

Here’s what to look for so you don’t get stuck with a general agency trying to do the job of a contractor’s agency.

A Specialty in Contractor’s Insurance

A lot of general service insurance providers offer contractor’s insurance – but that doesn’t meant that they’ll be the best fit for your needs. At best, they’ll be selecting from a short list of policies that they’ve offered other contractors and at worst they might pair you with incomplete coverage.

A specialized agency will know the ins and outs of contractor’s coverage – from what constitutes the best coverage to where to get it. They will be familiar with several different carriers and know how to get the best coverage for your needs at the lowest possible price. They’ll understand that you need to get to work as quickly as possible, and don’t have weeks to pick out a policy. They can help streamline the process for you so you save time and money.

Long Term Experience in the Field

The agency itself doesn’t have to be old, but someone in a key position (preferably the owner) should have plenty of experience working with contractors. Contracting is a unique business with special insurance needs. If an agency or owner has long term experience in the field, they’ll be up to date on industry trends, understand the types of jobs or clients you’ll be working with and know how to find the best match.

A California contractor’s insurance agent may be able to provide pointers that a more general agency might not. A provider with plenty of experience in the field has cultivated relationships with other clients, contractors, and insurance carriers. He or she can see where you fit into the big picture, which helps them better serve your needs.

Customized CA Coverage Plans

A good California contractor insurance service knows that contractors deal with unique situations – and insurance needs – every day. That’s why it’s so important to find a service that can find you customized coverage plans that give you exactly what you need. One size fits all doesn’t work for complete contractor coverage.

There are dozens of specialized situations that require unique California contractor’s insurance coverage plans. For example, you may be working on commercial property, which requires a different approach than if you’re working on a residential home. Your equipment, your tools, your employees and even your clients can determine what type of coverage you need – and many of these factors change between jobs.

Working with a California contractor’s insurance service that has specialized experience, in depth knowledge of the industry and can provide customized plans is the best way to make sure you’re covered completely.

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Getting contractor’s insurance may seem like a simple enough task at first. After all, you buy a solid general liability and worker’s comp policy, and then you can get down to business—right?

Unfortunately, this kind of thinking can leave you in massive debt, or even put you out of business! It’s a common problem that far too many contractors find themselves in. They rely on the basics and end up paying the price. Even if you only need minimal coverage, there are still aspects to the insurance coverage process that you’ve got to face.

Whether you’re buying a new policy or just shopping around for a great contractor’s insurance rate, here are four mistakes to avoid.

1. Failure to Purchase Enough Coverage

Contractor’s license bonds are required by the state of California in order to have an active license, but many contractors stop there.

“I probably won’t need it, so why bother?” is a common, often fatal attitude towards any additional type of insurance. The reason to bother is because you just might need it–and it’s a lot less expensive to spend a few dollars on the front end than tens of thousands later on.

For example, you might assume that tools are part of your general liability policy – but they aren’t covered. Considering the expense of most contracting tools, it’s important to have them covered properly. In addition, getting a commercial auto policy is an essential if you’re operating on a commercial contracting job.

Depending on your unique situation, there may be other essentials to consider as well – and a good insurance service can tell you more.

2. Thinking Your Contract is Insurance Enough

Your contract spells out a lot about your responsibility during a job – but it’s far from complete protection, especially if there are unforeseen events or negligence on the part of your client.

In a perfect world, your contract would be enough. But we live in a world with lawyers, and that means your contract could be interpreted in ways you never imagined. That’s why it’s important to have a policy that covers a variety of claims.

3. Failure to Review Your Policy Regularly

Buying a contractor insurance policy isn’t a one time thing! Your insurance needs will change as your business changes, and so should your policy. Many contractors drag their feet when it comes to changing their policies, and with so many insurance agencies that seem more like government bureaucracies than business partners, it’s easy to understand why.

But a good agency can work with you over time to easily change your policy as your business changes. They are often able to get more favorable payment terms or discounts for long-term customers. This is one reason it’s a good idea to find a good insurance provider and stick to them, instead of pricing new agencies every year or for every project.

You may want to consult with your agent when:

• You add or drop a significant number of employees.

• You gain or get rid of equipment, space, or other assets.

• You have finished several months or years of work on a long-term contract.

• You are about to take on significantly different types of jobs than in the past.

• Your business changes operating structure, ownership structure, or other important legal structure.

4. Failure to Understand Your Policy Exclusions

All policies have exclusions, and you need to know what your exclusions are – and get changes made before going further, if need be. This is another important area where an experienced, long-term agent can help you. It’s better to know the terms up front and prepare for the worst than be surprised when you need to execute your policy terms.

No project ever goes entirely how it should. By making smart choices with your contractor’s insurance – and finding the right insurance service that knows the contractor industry – you’ll be safe against any curve ball your project may throw at you.

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We get asked a lot, “Why does my personal credit determine what I pay? I’ve never had a claim!” I agree with you, there should be some way that you’re bonding claims history can be pulled and used for your future California Surety Bond. We’re hoping in the future this will become a factor. From an agency standpoint we have no say in how carriers determine their pricing. However, I can explain why your personal credit is used and how we can help.

Why:

Here’s the thing about California Surety Bonds, they are not like insurance. When you have a valid claim against your bond yes the carrier pays it. However, you are obligated to pay the carrier right back. It’s surprising how many people do not know this. When someone has good credit they are more likely to pay back money they owe. When someone has a history of not paying back debts they’re more likely to not pay back newly incurred debts. The carriers are aware of this and definitely take this into consideration.

How we can help:

Whether you’re looking for a Contractors License Bond, California Contractor Bonds, Performance Bond, Motor Vehicle Dealer Bond, or Talent Agency Bond we have the right markets for you. Our agency has access to several surety companies…and the ones you can’t find on Google or gain access to directly. When you submit a quote request to us we really do shop for you and offer you the best price out there. We can usually offer a payment plan as well. Here is what’s even better; we shop your California Surety Bond every year at renewal as well so you don’t have to. You can be assured every year that you’re paying the best price. So stop calling around and submitting as many quote requests as possible. We can offer surety bonds in California, Arizona, Nevada, Washington and Oregon. Click here for your free, no obligation quote.

“I do quality work and have never had a claim; I don’t need General Liability Insurance”. I’ve heard this countless times. Did you know insurance doesn’t cover faulty work? Comprehensive General Liability (CGL) insurance policies are designed to protect the insured from liability for injury or damage to the persons or property of others, not to pay for repairing or replacing the insured’s defective work and products. To suggest otherwise would encourage shoddy workmanship.

Let’s face it, there are several reason a claim could be filed against you at any time and even for work you’ve completed several years ago. “Really?!”, you ask. It’s the truth but we’ll tackle that another time. Today, I’m actually only going to give you one reason you really shouldn’t go without coverage. Trust me, it’s a good reason and the number one reason why I tell contractors to obtain coverage or keep their current policy in force.

We’ve all had that client at some point and time whom you just can’t seem to make happy. You may have done everything by the contract for this person but for whatever reason they aren’t happy. With our “sue happy” economy this usually ends up in a lawsuit. If you’ve experienced this client first hand consider yourself lucky if this did not end up in a lawsuit.

What’s the Result of Not Having Adequate Contractors Liability Insurance Coverage?

Here’s what happens when this does end in a lawsuit: You hire an attorney and go to court to prove you did nothing wrong. If you’re lucky enough to escape this without extreme financial hardship you lucked out. With attorney fees averaging $300 per hour you can imagine how your attorney bill could spiral out of control.

Here’s what happens when you have insurance: You submit the lawsuit to your insurance agent/carrier. They handle it from there. Period.

I recently saw a claim where the total amount paid was $32,700. Of that amount $25,000 was spent on legal fees. The claimant received $3,800. Crazy right? Hopefully you see where I’m going here. You really can’t afford to go without general liability insurance. When the average policy is under $1500 this is really something you should be considering.

Your business is important and needs protection. I suggest getting an insurance quote and figuring out how to budget this very necessary expense in. If you’re a serious business owner and care about the future of your business I wouldn’t wait another day to obtain insurance. Get a free, no obligation contractors liability insurance quote from us today. Protect yourself. Protect your business.

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