Many surety agents cringe at the thought of dealing with subdivision bonds – and for good reason. While there are some agents (and underwriters) in the industry who enjoy the challenges posed by this class of business, the word “subdivision” turns many agents away. Why? Often it is because subdivision bonds are different from contract bonds, which can be scary. Below are two quick tips to help you conquer your fear of the unknown.
There’s no getting around it: subdivision bonds require a lot more paperwork per bond than regular contract bonds. For a typical contractor who has an existing surety relationship, normally all that is needed to write a performance bond are bid results and a copy of the contract. Not so with subdivision. At a minimum, surety underwriters will ask for:
And unlike contract bonds, the bond principal is normally set up for one project, which can mean a new general indemnity agreement for each project.
The good news is that most subdivision bonds renew annually, requiring little additional work once they are in the books.
Not all sureties are created equal. While most can underwrite basic bid, performance, and payment bonds, only a few have the experience, expertise, and capabilities to write subdivision bonds. The process for both agents and contractors will be much more efficient when working with a surety that has this specialization in house. Agents who select the right surety for their customers’ subdivision business become valuable partners.
Obtaining subdivision bonds doesn’t need to be difficult. In fact, it can be fairly straightforward when you know what to expect and when you work with the right surety.
Learn more about effective collaboration in surety on our surety page.
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