A Surety Bond is NOT Insurance

By:     Craig F. Martin of Lamson, Dugan & Murray, LLP There are fundamental differences between insurance and surety bonds and knowing the difference will help you avoid making mistakes, should claims arise.   This blog will discuss the differences between insurance and surety bonds. Insurance An insurance policy is a two party contract between an insurer and the insured.   The policy is intended to protect the insured.   The cost of insurance is calculated by the insurer based on … [Read more...]

Troublesome Contract Clauses: Indemnity Clause

We continue our look at troublesome contract clauses with the Indemnity clause. Craig Martin, Attorney with Lamson, Dugan & Murray explains that indemnity is the shifting of loss from one party to another. Every state recognizes this legal right. The duty to indemnify can arise due to a statute, common law, or by contract. Common law and statutory indemnities may transfer liability from a party that has little or no responsibility for a loss to the party that has more or all of the … [Read more...]

Tips to Maintaining Good Surety Credit

One of the topics covered at the January 20th Contractor Seminar in St. Cloud was key elements to maintaining surety support. Goldleaf Surety Services' President Jack Anderson emphasized that the key element is communication. Surety companies do not like surprises when it comes to a company's financial picture. Some of the key items that companies need to communicate with their surety and their surety underwriter include: Change in Ownership Surety companies need a correct indemnity … [Read more...]

Surety Bond Basics – Part 2

In my previous blog Surety Bond Basics - Part 1, we looked at two frequently asked questions relating to bonds.  Here are several others that are also very common: Why do surety bonds need to be underwritten? A surety company must determine the risk of a loss occurring if the principal is unable to satisfy the obligation under the bond. Since a surety bond is an extension of credit, the surety company must review the principal’s financial information and business experience to determine if … [Read more...]