BC Surety Bonds

Bonding & surety insurance for BC businesses

Managing a business can be complicated and sometimes you need more than a handshake to satisfy your customers and suppliers. Surety bonds can address these requests. At Acera, our dedicated BC surety bond advisors are experienced with helping local businesses find the solutions they need.

In British Columbia, surety insurance will often cater to construction and contracting professionals, but surety bonds can also protect other business sectors. Surety bonds will protect your customers or suppliers against potential losses if you do not meet your obligations.

What is a surety bond?

Not to be confused with bonds in finance and lending, a surety bond is an instrument that guarantees an obligation is fully satisfied. If the obligation is not satisfied, the bond holder will be entitled to compensation for the loss of the unfulfilled obligation.

With all bonds, there is a three-party relationship:

1. Obligee – Entity requesting a bond, typically an owner and/or government body.
2. Principal – Entity that is the responsible for fulfilling the obligation the bond guarantees, typically a contractor or licence/permit holder (your business).
3. Surety – Entity that guarantees the bond, typically an insurance/bonding company.

There are two primary types of surety bonds, contract bonds (also known as construction bonds), and commercial bonds. Our experienced team of BC surety bond advisors can help you find the right solution.

BC Contract Bonds

At Acera Insurance, we have an experienced team of dedicated surety bond advisors who can help your business navigate the muddy waters of surety to obtain the bonds required and answer any questions you might have.

Our expertise enables us to quickly and holistically provide solutions to your business. We are deeply connected to BC’s construction industry, with strong industry partnerships through associations such as:

• Vancouver Regional Construction Association
• Northern Regional Construction Association
• Vancouver Island Construction Association
• Southern Interior Construction Association
• Mechanical Contractors Association of BC
• Electrical Contractors Association of BC
• BC Construction Association
• Surety Association of Canada

We keep informed of industry trends, changes, and education to serve as a key resource for all construction-related issues and topics.

What is a contract bond?

Contract bonds, also known as construction bonds, ensure a contractor (principal) fulfills their obligations under a contract. Should the contractor default 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:

1. Provide financing for the principal to complete the project.
2. 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. This, along with the three-party relationship, are the fundamental differences between surety bonds and insurance. Surety bonds may be provided by an insurance company, but surety bonds are not insurance.

Key Contract Bonds in BC

Here are five types of contract bonds and instruments applicable to companies in British Columbia.

Performance Bond

Guarantee that the obligation the contractor has with the owner is satisfied.

Labour & Material Bond (Payment Bond)

Guarantee 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

Assures a contractor is prequalified to bid and they are serious with obligations with respect to their tender and will follow through.

Consent of Surety (Agreement to Bond)

A commitment by the bonding company to provide the requested Performance and/or Labour & Material Bonds to the owner if the contractor is successful on their bid. This is not a bond technically and is only executed by the bonding company.

Maintenance Bond

Guarantees, for a specified period of time (typically 1 or 2 years), that the work the contractor was responsible for will be protected from any defects, faulty workmanship, and design. The contractor will be responsible to fix any issues and if they are unable, the bond will ensure that any qualified work is completed.

BC Commercial Bonds

Often security (bonding) is required by government agencies to ensure organizations follow regulations with respect to licensing and payment of duties and taxes. Acera’s surety bond advisors in BC have issuing authority from all the major bonding companies which gives us on-site power of attorney to issue your commercial bond instantly. We’ve made it easy, fast, and efficient for you to get the bond you need.

We can provide a wide range of commercial bonds including:

• Licence and Permit Bonds
• Customs and Excise Bonds
• Fiduciary and Estate Bonds (Court/Judicial Bonds, Probate Bonds)
• Lost Instrument Bonds
• Carnet Bonds

The following are areas or types of operations where licence and permit bonds are required:

* There may be other areas security is required and a bond can be posted

Customs and excise bonds relate to the duties and taxes that are required to be paid to the government. Types of activities and taxes covered may include:

Explored your surety options lately? Talk to an Acera Insurance expert near you.

Have an Acera Insurance surety bond advisor review your business and programs today. As an independent, employee-owned brokerage, we work with several top surety companies to provide you with a choice in your coverage. Our BC team takes care of the research and price shopping for you, delivering competitive surety insurance quotes customized to your business. Connect with us today.