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... the client determine whether sequential bonds in amounts within its authority could be used instead of a single bond. The broker said this could be done. The broker told the client the bonding could be provided. Upon getting the contract, the manufacturer learned that the contract required a single bond for the total amount and that multiple bonds wouldn't be permitted. The bond couldn't be provided, and the client's bid was rejected. The manufacturer sued the broker, agent, and carrier for loss of business. This claim could've been avoided. In this as in other E&O defense situations, it's necessary to document agreements to establish the intent and understanding of the parties. It's important for a bonding agency to know the company's requirements. The agency must also communicate its authority limitations when the requested bonds ... is writing what it thinks is a carpenter, only to find out through a claim that roofing is also being done, you could have a real problem. Get the contractor to detail in writing the type of work it performs. If you know that a company won't write for your contractor's type of work, tell the insurer up front and document your conversation. When something goes wrong with a bond, big dollars are typically at stake. It's critical that you know your agency's level of bonding authority and their proper procedure. A claim was made against an agency for failing to provide a performance bond required by a contract. A broker asked the agent to provide, one of its clients, a manufacturer, with a performance bond the customer required. The agent said the bond limit requested ...

...iness? When do you begin your bidding process? When do you prefer ...

...re lower insurance overhead into my bids? 3) Can SOMEBODY explain bonds to my satisfaction? At (Your Agenc...

... bonds is a time-consuming task that requires a working knowledge of the construction industry and financial analysis. Simply learning the intricacies of surety bonds took two or three years, while picking up construction industry terminology is an ongoing process, Ward says. You have to know what a CMU (concrete-masonry unit) is, ' for example, says Ward. The agency also spends a great deal of time issuing bid bonds for clients who are bidding on jobs-as many as 20 bid bonds for every successful bid. The agency receives no commission unless the builder wins the bid. A final drawback: the agency is at the mercy of the same market forces that create dramatic swings in the construction industry. If contractors aren't working, then the agency isn't making any money on that line of business. Still, ... a construction firm office up the street walked in and asked if we had a contractor surety questionnaire, ' recalls John Ward, one of two principals in the family-owned business. The contractor had messed up the form provided by an out-of-town agent and needed a clean version to fill out. I said I could provide the same service for him locally, ' says Ward. We had never done surety bonds before and I thought it would be like writing a fire policy. It was a real learning experience. Today, due to a lot of hard work and a common sense approach, construction surety bonds-guarantees that contractors will complete construction projects-account for about 15 percent of the agency's $2.25 million in annual premiums. Three-quarters of the agency's business is in commercial lines, and about half of that is with ...

...spends a great deal of time issuing bid bonds for clients who are bidding on jobs-as many as 20 bid bonds for every successful bid. The agency receives no commission unless the builder wins the bid. A final drawback: the agency is a...nging legislation. 'The notary public bonds and used-car dealer bonds are required by the state,' he exp...

...ases. Risk managers may also handle bid, performance, and permit bonds. Professional Networking. As in ...

...licy will be accepted on commercial bids and that the carrier has the financia... can disqualify a firm from commercial bids or leave exposures uncovered. Befo...

... of loss prevention, risk managers should have general knowledge backed by their own loss information. This should enable them to determine the best method of obtaining what loss-prevention counsel is needed. Risk Function Administration. Miscellaneous duties include supervising contractors' Certificates of Insurance, attending public hearings on insurance matters, and helping legal counsel develop standards for such items as purchase orders and leases. Risk managers may also handle bid, performance, and permit bonds. Professional Networking. As in any professional field, continual contact with peers is essential. Membership in the following groups is recommended: Public Risk and Insurance Management Association (PRIMA) 1101 Connecticut Ave. N.W., Suite 1009 Washington, DC 20036 (202) 293-1892 Risk and Insurance Management Association (RIMS) 205 E. 42nd St. New York, ... risk manager must understand everything happening or about to happen in the organization. In addition to understanding the entity and its people through years of experience, the risk manager should: Physically inspect major properties often enough to know what's going on Talk regularly with key staff and operating officials Study the annual budget to attain a feel for each activity's financial aspects Review all requests for funds for changes Read contracts, bond indentures, leases, and similar documents that may have insurance clauses or indemnity (hold harmless) provisions Study reports of all insured and self-insured losses Read minutes of meetings of the governing body, and review the agenda to see whether any item has risk-management implications Establish dollar values of all significant loss potentials Risk Management Policy Development. The risk manager generally prepares a written policy for consideration and approval by ...