# Bonding & Surety > Protect your business & your clients with Bonding & Surety Insurance. Reduce financial risk & ensure project completion. Bonding & Surety Securing your bond with expertise and efficiency. Our highly specialized, industry-leading surety experts provide professional advice for your surety and risk management obligations locally, nationally and globally. Through our network of surety partners, we’ll secure the bond you need and provide consulting services to support your success on the jobsite and beyond. Get a Quote Live Webinar: Navigating Employment Practices Liability – Reserve Your Spot Your guide to bonding and surety. Not to be confused with bonds in finance, a surety bond guarantees that an obligation (or contract) is fully satisfied. If it is not satisfied, the bond holder will be entitled to compensation for associated losses. Many clients, including those in government, will request you obtain a surety bond. Some Canadian provinces may even mandate a surety bond before work can begin. A surety bond isn’t considered to be business insurance for a few reasons: It involves three parties The owner and/or government body requesting the bond The business responsible for fulfilling the obligation The insurance/bonding company that guarantees the bond It’s paid out to a client, not to your business. You are required to pay back the entire amount of the bond to your surety provider. Supporting businesses across Canada. Get your surety and bonding solutions by phone or in person at your nearest location. Get a Quote Find a Branch Contract bonds to guarantee your projects. Also known as construction bonds, contract bonds ensure the obligations of a project will be met. These are the five types of contract bonds and instruments we can provide at Acera Insurance: Performance Bond This guarantees that the obligation the contractor has with the owner is satisfied. Labour & Material Bond (Payment Bond) By guaranteeing the contractor will pay all subcontractors and suppliers in relation to the obligation (project), this limits the possibility of lien claims against the owner. Bid Bond This bond assures a contractor is prequalified to bid and they are serious about their obligations with respect to their tender and will follow through. Consent of Surety (Agreement to Bond) Not technically a bond, this is a commitment to provide the requested performance and/or labour and material bonds to the owner if the contractor is successful on their bid. Maintenance Bond This bond guarantees, for a specified period of time (typically one or two years), that the contractor’s work will be protected from any defects, faulty workmanship, and design. Commercial bonds to ensure compliance. Government agencies often require bonding to ensure you’re following regulations for licensing and payment of duties and taxes. We can provide a wide range of commercial bonds including: Licence and Permit Bonds These bonds are for businesses and contractors who require specific licensing to operate. See our FAQ for the types of operations where these bonds are required. Customs and Excise Bonds These bonds relate to the duties and taxes that are required to be paid to the government. See our FAQ for the types of activities and taxes covered by these bonds. Fiduciary and Estate These are court/judicial and probate bonds that can help cover losses in the event of a court proceeding. Lost Instrument Bonds These are required in order to obtain replacements for stock, debenture, warrants, or bonds (like Canada Savings Bonds), life insurance policies, and other financial instruments when an individual or company loses the originals. See our FAQ for details on guarantees. Carnet Bonds These are essentially passports for goods/equipment that are brought across a border and returned after use. This simplifies customs procedures with a single document, arranged in advance at a pre-determined cost in Canadian currency. It also eases exit and re-entry into Canada, reducing costs for duties, taxes, and security at the time of importation. CARM and RPP Surety Bonds Also called customs bonds, these surety bonds function as a form of guarantee that the CBSA receives payment on importing fees and duties so your imported commercial goods can be released to you. Why choose Acera for bonding and surety? At Acera Insurance, our surety specialists have issuing authority from all the major bonding companies which allows us to issue your bond quickly and easily. Specialized Expertise Our dedicated team of experienced surety experts specialize in bonding and bring you in-house underwriting and contract analysis services. Reduce Your Bidding Stress Our surety team is dedicated to efficient bid bond issuance, allowing you to respond quickly to project opportunities. Global Capabilities Partnering with a vast global network of surety providers, we can provide bonds for anywhere you do business. Answering your most common questions. How much does a surety bond cost? The cost of a bond varies depending on the type and the provider you choose, as there are many different cost structures. Generally, you pay between 1 to 15% of the total coverage provided by the bond. The higher the risk, the more you’ll pay. Construction bonds are often on the higher end as they’re considered to be riskier. Your bond rate is determined by the following: The type of bond Length of the bond obligation The value of the bond Your risk level as an applicant including your financial history, credit score, business revenue, ability to complete the bond obligation, experience, licenses, etc. Who needs surety bonds? Contractors are often required by clients to be bonded, particularly for government projects but private clients may also stipulate that all contractors have bonds. Although most common in construction, bonds may also be required in manufacturing and other industries. If you’re looking to win a project bid, having bonds for the tendering stage may make you a more appealing, trustworthy candidate. As bonds are designed to protect the potential client (it’s essentially insurance for your customer), it gives them peace of mind. Will a letter of credit suffice in lieu of a surety bond? While both are forms of financial guarantees, they are not the same and a letter of credit should not replace a surety bond: A letter of credit is issued by a bank and is used to guarantee payment for a specified amount under the contract.  A surety bond is issued by an insurance provider to guarantee fulfillment of obligations under the contract. In the case of a construction project, if the contractor defaults, the bond provider takes the steps required to complete the project (e.g. provide the contractor with financial support, select a new contractor, take over the project from the contractor, provide support for the project owner to select a new contractor). How long do surety bonds last? It depends on the surety bond and the exact terms under your agreement, but most bonds will expire around a year after the date of being issued. However, the duration can vary. Some payment bonds may last up to two years, and other types of surety bonds can last even longer. Moreover, some bonds have the option to be renewed, whereas others will be classed as “non-renewable.” What does it mean to be “bonded?” Companies that are considered “bonded” have been deemed as trustworthy by the underwriting service (i.e., surety bond issuer). This is attractive to potential clients as it shows you have the ability to recoup if there is a loss and work is guaranteed. Note that the Canadian government will set forth certain requirements and regulations for contractors, subcontractors, and companies, depending on the type of work being done and the industry. There may be criminal background checks, credit history checks, and so on. The bond applicant must provide the issuing company with all the required data to verify their creditworthiness and other stats. What happens if a contractor defaults on their contractual obligation? The surety company will be required by the bond to either a) pay out to the obligee for the loss suffered as a result of the default or b) remedy the situation to allow for the completion of the obligation, up to the amount at which the bond’s value is set. There are two ways the surety can remedy the situation: Provide financing for the principal to complete the project. Pay another company to complete the project. Any loss that the surety suffers through remedy or payout is expected to be repaid back to the surety by the principal. What types of operations require license and permit bonds? The following are types of operations where licence and permit bonds are required: Gas contractors Mine operations/environmental remediation Roofing contractors Collection agencies Consumer protection Direct sellers Grain dealers Hazardous waste transport licensing Electrical contractors Contractors’ licensing and permitting Real estate and mortgage brokers Highway transportation Motor vehicle dealers Private investigators Road cut bonds Livestock dealers * There may be other areas where security is required and a bond can be posted. What activities and taxes are covered by customs and excise bonds? Types of activities and taxes covered may include:: Cannabis tax bond (for licensing) Bonded carrier operations Customs bonded warehouse Customs broker licence Customs sufferance warehouse Fuel tax Non-resident GST Brewer, spirits, distiller/wine, or tobacco tax Duty-free shops Release of goods Temporary importation US customs for imported goods/operations Sales tax Air, highway, marine, or rail carrier tax What does a lost instrument bond guarantee? The bond guarantees that the issuer of the replacement security will not suffer a financial loss as a result of a duplicate instrument being issued. Examples of lost document bonds include:  Fixed penalty  Open penalty  Waiver of probate  It also serves as a guarantee that if the lost instrument is found in the future, it will be returned to the surety writing the bond for proper disposal so that no future economic loss from this instrument can occur. Business insurance insights for your everyday. Still have questions? 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