Becoming the victim of surety bond fraud will cost you and your clients a lot of trouble, time and money. When a surety company fails to honor a bond, it becomes a headache for all parties involved, which is why you should always choose a reliable surety partner for your bond.
Avoiding surety bond fraud is smart risk management. It requires a small bit of effort and in exchange you will get the assurance that the surety bond will protect your client. You don’t want to find out that a surety doesn’t exist in the event that a claim is made.
Here are some surefire ways to avoid surety bond fraud.
Make Sure the Surety is Approved and Licensed
If you’re filing a bond in federal court, the courts should have a list of approved sureties in the US. Never accept a bond from a surety company that is not verified. Make sure to do a thorough background check on the company that will be providing the bond, just to make sure that they have a good history and reputation in the industry.
You can even check with the state insurance commissioner’s office to make sure that the company is licensed in the state.
Watch Out for Red Flags
There are certain tell-tale signs that the company you are working with is not dealing in secure, legitimate bonds. These can include:
- Companies that claim they do not need any underwriting information from you.
- Companies that are incorporated outside of the US. (certain countries have very non-existent regulations).
- Companies that require outrageous up-front fees for applications or high bond rates.
- Companies that engage in fraudulent billing.
Work with the Right Surety Agency
Make sure that the agency you are working with is licensed in the state in which you are applying for a bond. If they are not, this can slow the application process down because they will have to pass it over to a company that is approved in your state.
The Patrick J. Thomas Agency is licensed in 29 states and has a 50-year reputation in the surety industry. We have worked with large scale businesses and small attorney’s offices to help them secure the right bond for their client. Our approval process is fast, simple and easy. Contact us today to get started on applying for your next surety bond.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.