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How South Coast Surety Can Improve Your Bottom Line

The Power of South Coast Surety as Your Bond Broker

Selling surety bonds doesn’t have to be complicated, especially when you have the expertise of South Coast Surety by your side. We specialize exclusively in surety bonding, and this dedication sets us apart because we have no interest in other insurance policies. With decades of experience, we offer unparalleled knowledge and mature, nurtured relationships with dozens of surety markets, ensuring the process is smooth and optimized for your success.

No Competition, Specialized Focus

One of the distinct advantages of choosing South Coast Surety is the absence of competition. Unlike agencies that deal in both insurance and surety, we focus solely on surety bonds. This exclusive focus ensures that your customers remain exclusively yours. This commitment goes beyond transactions; it’s about building enduring relationships based on trust and confidence.

Streamlined Processes with Our Exclusive Portal

We’ve spent years hearing the same complaints from agents like you about the challenges of managing your clients’ bonds and navigating the intricacies of surety bonds themselves. This is why we created a state-of-the-art agent portal called SuretyBonds.Market (SBM). The user-friendly interface gives agents like you 100% visibility and control throughout each stage, from application to approval to issuance. Bond applications have never been easier, and you’ll no longer find yourself grappling with commission checks or uncertain about which customers obtained which bonds. Furthermore, the SBM portal allows direct communication with our team, giving you access to important notes and documents and the ability to monitor your client’s bond seamlessly.

Stronger Relationships, Competitive Advantage

In the dynamic landscape of surety bonding, relationships are a cornerstone. South Coast Surety takes pride in its extensive nationwide network, built from relationships established with over 25 markets. This network translates into a competitive advantage for you. We know which sureties to approach for different bonds, ensuring more competitive rates with a faster turnaround because we won’t waste time placing bonds with uninterested markets. Furthermore, our in-house authority expedites the approval process for a variety of common bonds, offering swift responses and efficient handling of bond requests no matter which state you’re operating in.

The Basics of Bonding

If you haven’t been selling surety bonds to your customers, you are missing out on a significant opportunity to grow your bottom line. Let’s cover some of the basics of surety bonds and how they can help your business.



For those not intimately familiar with surety bonds, they are a three-party agreement between the principal, obligee, and surety company that transfers the financial liability of a principal acting improperly from the obligee to the surety company. Surety bonds are typically categorized into two types: commercial and contract bonds.

Commercial bonds can be further segmented into more categories; however, they are most commonly required as a licensing requirement for regulated industries (ex., contractor licenses, motor vehicle dealer licenses, etc.). If the licensed business or individual fails to adhere to licensing laws, any injured party may recover damages from the surety that issued the bond up to the bond amount by filing a valid claim. However, the principal (the business or individual that has the bond) is financially liable for reimbursing the surety for any claims paid out by the surety plus additional fees or expenses incurred by the surety.

Contract bonds, on the other hand, are most often associated with the construction industry. There are contract bonds for commercial projects, such as security and janitorial contracts; however, for simplicity, we will be using examples from the construction industry for the remainder of this article.

Contract bonds are typically required for public construction projects to transfer the liability of a contractor backing out of or failing to complete a project as outlined by the contract. For instance, if the contractor uses faulty materials, does not complete the project, or fails to pay their suppliers and subcontractors, the injured party (typically the project owner) can file a claim against the contractor bond to recover damages. Again, the principal on the bond (the contract) is ultimately financially liable for any valid claims.

Contract vs. Commercial

What is a Contract Bond?

A contract bond is a surety bond specific to a contract for construction or services, such as a bid bond or a payment and performance bond. Typically, these bonds are required as part of the contract between the general contractor and the project owner. These can be required for both public and private construction projects.

Specifically, bid bonds are required when you submit your bid at the start of the bidding process for a project. Payment and performance bonds are often required once you are awarded the contract.

How Does a Contract Bond Work?

A contract bond ensures that the contractor will fulfill their obligations to the project owner as outlined by the contract. If the contractor fails to do so, the surety company will step in to ensure the project is completed per the contract. If the project owner suffers losses, they can recover damages from the surety via a claim on the contractor’s bond. However, the contractor is liable for reimbursing the surety for any claims paid out, plus additional fees and expenses incurred by the surety. Failure to reimburse the surety can harm the contractor’s ability to obtain bonds in the future, financial well-being, and reputation.

For example, suppose a general contractor has a performance bond, and they fail to complete the project due to a breach of contract. In that case, the surety company will work closely with the project owner to ensure the project is completed, for instance, by providing a qualified and trusted replacement contractor or by reimbursing the project owner up to the contract price.


Types of Contract Bonds

Bid Bonds

Bid bonds are required when a contractor is bidding on a construction project. They act as a guarantee that the bidder will enter into the contract for the price quoted and provide all necessary performance and payment bonds if awarded the project. This ensures that contractors don’t place unrealistic bids just to win a project and then back out later, leaving the project owner with no one to complete the project and delaying the start date while they find a new contractor to award the project to.

Payment Bonds

Payment bonds are another type of contract bond that guarantees subcontractors and suppliers will be paid for their work and the materials provided on a construction project. These bonds protect the subcontractors and suppliers from financial losses in case the contractor fails to pay them, either due to bankruptcy or other reasons.

In most cases, payment bonds are required by the project owner to guarantee the general contractor will pay certain subcontractors, laborers, and material suppliers associated with the project. They are typically required in both public and private construction projects.

Performance Bonds

Performance bonds (almost always obtained in tandem with payment bonds) ensure that the contractor will perform all required work and meet contract specifications in a timely manner. If the contractor fails to do so, this bond provides financial protection to the project owner by covering the additional costs needed to complete the project.

Maintenance Bonds

Maintenance bonds, also known as warranty or guarantee bonds, protect the obligee from any defects or issues with the completed project for a specified period of time after completion. If any problems arise during this time, the contractor will be given an opportunity to correct the defects, or the surety company will cover the costs to fix them.

Maintenance bonds are most commonly required by government agencies and may also be requested by private project owners. They are often included as part of the performance bond, however, they can be issued separately.

What is a Commercial Surety Bond?

Commercial bonds, on the other hand, cover a very broad range of industries and bonds. Commercial surety bonds are typically required by federal, state, and local governments to ensure compliance with various statutes, regulations, and ordinances. They can generally be divided into five types of bonds:

  1. License and Permit Bonds
  2. Court Bonds (also called Judicial Bonds)
  3. Fiduciary Bonds (also called Probate Bonds)
  4. Public Official Bonds
  5. Miscellaneous Bonds (anything that does not fit into the other categories, such as utility and tax bonds)

As an agent, you’ll most frequently encounter requests for License and Permit Bonds.

How Does a Commercial Surety Bond Work?

Commercial bonds, for example, license and permit bonds, are typically required as a licensing requirement for regulated businesses like motor vehicle dealers or state-licensed contractors.

For instance, general contractors in California must be licensed by the California Contractor License Board. One of the requirements to qualify for a license is to obtain a California Contractor License Bond (CLB). The California CLB is a surety bond that ensures the contractor will adhere to all state laws and licensing requirements. If the contractor fails to adhere to the laws or operates fraudulently, any injured party can file a claim against the contractor’s bond. The surety will investigate the claim’s validity; if it is valid, the surety will compensate the injured party up to the bond amount. The contractor is ultimately liable for reimbursing the surety for any claims paid out, plus additional fees and expenses incurred.


Navigating the Surety Landscape

In conclusion, South Coast Surety is not just a provider of surety bonds; we are your strategic ally in navigating the intricacies of this specialized field. By choosing us, you gain access to expertise in both contract and commercial surety throughout all 50 states, exclusivity, a user-friendly portal, and a network of robust relationships. Elevate your business, enhance your bottom line, and provide your clients with the best surety bonding solutions available, all while protecting your client relationships.

Partner with South Coast Surety for a transformative approach to surety bonding that’s tailored to propel your business to new heights. We encourage you to connect with Richard Ford at for your Contract Bonding needs, or Ann Robertson at for any of your Commercial Bonding needs. We look forward to hearing from you!

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