When you're looking for a solid bonding relationship, shouldn't it be built on a complete risk review and not simply on a complete financial review?
Sure, your financials are strong, but they can be misleading or downright unreliable if your surety team hasn't gone beyond just delivering a bond.
Imagine facing an uncovered loss with a full backlog and no money to prosecute the work. It's bonded work and that means the surety must step in and complete it; you didn't forget you personally indemnified that bond, did you?
Imagine facing a serious loss where your limits were adequate to your company's net worth 3 years ago but haven't contemplated that new $4,000,000 in revenue you've added since then. Are you a bigger target at $6,000,000 revenue than you were at $2,000,000?
You've bonded these jobs, and you've produced a clear, contractual financial guarantee in which you are fully indemnifying the surety both corporately and personally. When you set those insurance limits, didn't at least part of that calculation take into consideration the corporate veil, your protections personally against liability?
Of course they did. Did you adjust those limits when you took on a project which, through that personal indemnity pierces the veil and leaves you personally exposed?
This is piercing the veil from the inside. You may not experience a loss that can break through the veil head on but an uncovered loss or a loss with inadequate limits can wreak havoc on current operations and leave you staring down the barrel of a sizeable bond loss. You might enjoy personal protection from the veil on the insurance claim but what if that claim wipes out the working capital in your company? The surety still has your personal indemnity option to complete that work and pay those subs on your behalf. How's that veil doing?
In most cases, it's not that one swift blow. It's usually a long-term effect of your company under siege where you and your senior management lose focus on critical day-to-day management and new growth as your energy and money pour into defending what you've built. Performance, morale, cash flow, revenue..... the spiral can be awful.
We have the experience and the rounded team who will provide this in-depth review. The people who are not merely up-to-date on emerging risks but up-to-date with how fluid those risks are when considered by a company heavily involved in modern construction.
The Bond Producer will get you the bond and call it a success and, yes, we do that too. We "get the bond" every day, and most days, on an hourly basis.
The Surety Advisor delivers that bond along with these and other critical services that should be the standard, but we all know aren't.
From clients just starting out and in search of their first $300,000 bond, to firms with over 100 years in contracting and bond lines in excess of $150,000,000, we have the experience, team, and drive to deliver beyond the bond.
Ken Fontana, Surety Manager
Cottingham & Butler’s Risk Management Division
563.587.6341 | kfontana@cottinghambutler.com
Ken began his career in the insurance industry in 1996 at the corporate offices of Horace Mann Insurance. After relocating to Wyoming, he spent several years managing corporate safety programs, insurance, and claims as the RMO for a nationally exposed company engaged in numerous state and federal contracts including operations at three military bases, the Denver Federal Center, and HUD program management. He has been a licensed insurance agent for 20 years with the last 10 focused strictly on contract and commercial surety. Ken’s relationships with the nation’s top sureties and his experience give him a uniquely well-rounded approach to your overall surety, bonding, and subcontractor default insurance needs.