Make Money On Surety Bonds.

Sep 19, 2012

  1. SuretyBonds.com
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    SuretyBonds.com Expert

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    Hey everyone,

    I wanted to open a thread so everyone can ask any questions they may have about surety bonds. Either as a whole or about a specific bond requirement you see fequently. Surety bonds are a small niche market, which often gets over looked. That being said we have found bagents have a lot of questions regarding the unknown world of surety bonds and we want to answer them.

    If you would prefer to email me questions feel free to.

    mike at suretybonds dot com.

    -Mike
     
    Last edited: Sep 19, 2012
  2. iiinycboi
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    iiinycboi Guru

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    i am interested and i was going to call but its already 6pm.

    how easy is the process? from customer to issue, (is it something like this)

    customer comes in wants bond, i quote online, i give quote, customer pays, i print id card or policy, customer goes?

    also do they pay yearly like insurance? and whose name is on their surety bond or policy, is this something like a sub-producer agreement? or you are the carrier and i am the producer?

    i have think i have a market for liquor license, but just new to the bonds thing.

    oh are they fixed rates for 10k 20k etc... or they can fluctuate? and how competitive is the pricing? can i just go into a liquor store and say hey hows your bond doing? how much are you paying, since i am doing your liquor store bop maybe i can get you a cheaper rate for the bond?
     
    Last edited: Sep 19, 2012
  3. SuretyBonds.com
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    A lot of good questions. I'll try to answer each one individually so it makes more sense. Theres a lot of questions here so I will do my best to not be too wordy. We can also discuss tomorrow if you'd like.

    We will provide you with our basic commercial application (1 page) which you will need to complete with the customer and fax or email to us along with a copy of the bond form your client needs. Our in house underwriters will underwrite the bond and email you the rate. We generally quote in jsut a coupel of hours but almost always in less than 24. You collect the premium, net your commission, and mail the application and indemnity agreement (we provide) to us. We will issue the bond, email you a copy and mail the original (your client will need an original signature raised seal bond) to your office.

    Most of the bonds you will come across are required annually to remain compliant with whatever licensure statute your client is trying to appease. In your case you are probably referring to the New York Liquor Retailer Bond which is a $1,000 penalty. This bond is very simple and relatively low premium. Usually just $50 a year and everyone qualifies.

    This will be a sub-producer agreement. We are simply a high volume bond only agency with in house underwriting authory for multiple carriers that the average agent can't meet volume requirements for.

    Some bonds, like the one I referred to above will be a fixed rate. Everyone will qualify because the risk amount is low and the losses are also low. Others, greater risks, will be underwritten based on your clients, or the business owners, personal credit scores and their score will determine the rate in which they qualify. On higher risk bonds, generally greater then $50k or bonds with high losses, the underwriter may even request personal and/or business financials. The general rule for risks between $5k-$50k is 1-5% with good credit (650-700+) and 6%-25% (less than 650). Those arent exact figures for every bond but it will fit for most. Theres a big variance in the poor credit because factors such as collections, past dues, bankruptcy etc will be taken into account.

    If you are referring to the $1k Liquor Retailor bond required by the NYS Liquor Authority they are likely locked into the lowest rate. Unless their current agent charged a bunch of fees (we see that a lot) they should be paying $50 as that is kind of the industry standard. If you are referring to a tax bond there could be a lot of fluctuation in price.

    Hope this helps!

    -Josh
     
  4. Guest
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    bonds are the most easy think you can probally sell. The hard part if learning which one you need, but the company is usually pretty helpful, and often the client will call you and say I need this kind of bond, send them an app fill it out, return to you and fax in (or some places and certain bonds you can quote online) sit back, wait a day or 2, get quote, bind the bond, cash your paycheck.
     
    Guest, Sep 19, 2012
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  5. SuretyBonds.com
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    I wanted to offer some advice on other potential industries that are required to get bonds in New York since the Liquor Retailer bond is a small premium and not too enticing:
    • Second hand dealers - these are your pawn shops, used appliance and electronic stores, used firearm stores etc.
    • Motor Vehicle Dealers - new and used. Premiums up to $1,500 here.
    • Insurance Adjusters
    • Mortgage Bankers/Brokers - Very good premiums here.
    • Various contractors
    • Public officials - treasurers
    • Anyone getting construction or service contracts with the gov't. - Contractors, larger janitorial companies etc.
    - - - - - - - - - - - - - - - - - -
    You're very correct. The application is simple and doesnt require much oversight to have the client fill it out. Most bonds simply require business and owner nformation basics. Things such as legal names, addresses, and SSN if credit score underwriting is required.
     
    Last edited: Sep 19, 2012
  6. iiinycboi
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    ahh good stuff, i will try to call in today and set this up for my agency.

    simple enough, just hope it doesnt really much service work.
     
  7. SuretyBonds.com
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    One of the best parts about bonds is the service work is minimal. Once the bond is filed and accepted, unless they change their name or address, you won't need to touch it until renewal!
     
  8. tln2004
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    they are the easiest to sell, but with so many types of bonds, learning the business seems very daunting. Any recommendations to faster learn the business?
     
    tln2004, Sep 22, 2012
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  9. SuretyBonds.com
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    The best way to begin learning is focusing on the bonds required in your state. Some have a lot of different bond requirements and some have a few which make learning them a lot easier.

    What state are you licensed in? Knowing this can help me pinpoint the most commonly seen requirements in your state and help you with the basic knowledge of each.

    Once you do a few bonds you'll be able to classify them better. While the sheer amount of bond requirements is daunting most can be underwritten one of just a few different ways effectively taking thousands of requirements and allowing you to handle them in just a handful of ways.

    With that said, all we do is bonds. We have enough experience and markets to allow us to place just about anything at the going rate for the indsutry. What we tell our agents to do if they run across a bond and dont know the specifics is to just tell their clients they can likely get it done and at the best terms the market can provide so not to worry. We can't always work miracles but we are as competitive as anyone out there.
     
  10. oclife
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    oclife Expert

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    What are the major players in providing leads for this market. I used to work for a surety bond company and they would get daily leads for Contractor's License bond.

    Thanks
     
    oclife, Nov 21, 2012
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