Cleaning & Maintenance Management Online

Surety Bonds Provide Peace Of Mind

September 19, 2010

The economic volatility of the last 18 months has consumers clamoring for new layers of protection.

That desire is fueling an uptick in the interest in surety bonds that cover both cleaning companies and their customers.

Bonds have long played an integral role in the growth and success of cleaning and maintenance firms nationwide.

While not uniformly mandatory, these risk-mitigation tools are essential for most projects involving taxpayer dollars.

But, private companies and individual consumers are starting to take greater notice.

The phrase "licensed and bonded" has long been a staple of advertisements, business cards and other marketing avenues for service-related companies — cleaning companies included.

On the heels of the subprime mortgage collapse and a series of high-profile accounting and financial scandals, consumers in general are increasingly on the lookout for protection and potential avenues of relief.

"This past year has seemed to be especially active statutorily and even with regulation in terms of requiring or introducing new bond requirements," said Rob Duke, director of underwriting and assistant counsel for the Surety & Fidelity Association of America. "In this environment, there may be a call for greater oversight and greater consumer protections, and a bond can play a role in that."

Surety bonds aren''t a foreign concept to most long-time cleaning and maintenance executives.

But, they can prove a curiosity to new and emerging companies.

Surety Bonds Breakdown

In essence, these are three-party agreements between a principal — the entity performing the work — the obligee — the party protected from loss by the bond — and the surety issuing the bond.

Surety bonds help guarantee that a contract and all applicable laws and regulations are followed.

They also provide consumers, organizations and the state or municipality with a way to recoup funds in the face of illicit, illegal or otherwise detrimental activity on the part of the bondholder.

Cleaning and maintenance companies entrust their workers with significant responsibility — as do their clients, who open their homes and businesses to strangers.

There''s an entire suite of surety bonds that can provide fiscal protection for both cleaning companies and their consumers.

For example, fidelity bonds such as employee dishonesty bonds and janitorial services bonds can help insulate companies against losses incurred by renegade employees.

In most settings, bond claims are only paid out upon conviction.

These specific surety bonds can also serve as a competitive advantage in an increasingly crowded marketplace.

While their inherent value can be debated by cleaning and maintenance insiders, consumers continue to latch onto protections and guarantees that are truly enforceable.

Obtaining surety bonds is typically a streamlined and straightforward process.

Cleaning service and industry bonds are generally low-cost ventures with a relatively low risk for sureties.

A surety company will likely take a look at an applicant''s finances, credit history and overall company status.

But, in most cases, these types of bonds can be processed the same day.

Coverage amounts usually vary from $5,000 to $100,000, with the span of coverage anywhere from one to three years.

In real dollars, bond premiums for a $5,000 bond that covers five or fewer workers might cost as little as $100 per year.

The $100,000 bond covering 20 employees might feature a premium in the $650 range.

How To Find A Surety

These are specialized business service bonds that can be issued by most surety companies nationwide.

Given that, cleaning and maintenance start-ups and even existing business owners can benefit by shopping around and comparing rates.

When it comes to choosing a surety, it''s always a good idea to let the rates guide you.

But, it can pay off to conduct a bit of due diligence and ensure you''re working with a reputable company.

Here are a few tips for evaluating prospective surety companies:

  • Look for a pro. While price is important, so is finding a surety that understands and has experience with your specific market or industry. A well-oiled surety company looks out for the best interests of its clients and can often provide a valuable assessment of your business and its path.

  • Underwriting requirements. This isn''t always an issue with these types of bonds, but it''s an element to consider. Make sure a prospective surety makes clear its standards and requirements when it comes to bond underwriting. This shouldn''t be a secret recipe, but rather a careful balance of key financial indicators.

  • Company history. Take some time to check out the background and history of the surety in question. Do they have a reputation in the industry, either good or bad? Are they working with legitimate companies in your field? Surety companies are regulated in each state by its Department of Insurance. It''s a good idea to check with those departments as well as the Better Business Bureau.

  • Who vouches for them? See if the surety belongs to any industry organizations or advocacy groups. A couple of major ones are the National Association of Surety Bond Producers (NASBP) and the Surety & Fidelity Association of American (SFAA). The NASBP''s website has an interactive, searchable map of bond producers in all 50 states.

  • Consider those first impressions. If you have a concern or strange vibe regarding a prospective surety, speak up and ensure your questions are addressed. While they won''t necessarily break the bank, surety bonds are an investment nonetheless. Make sure you''re working with a surety company that''s concerned with earnestly serving your needs and those of your customers.

Chris Birk is a principal with, the nation''s leading online provider of surety bonds. A former newspaper and magazine writer, Birk''s work has appeared in more than two dozen newspapers and magazines, including the Chicago Sun-Times, the St. Louis Post-Dispatch and Comstock''s. You can reach him at