Commercial surety bonds: A Q&A with UFG Surety’s Quinson Holderness

For contractors, a commercial surety bond is often required by an ordinance, regulation or law.

Also known as non-contract bonds, commercial surety bonds are a topic Senior Commercial Surety Underwriter Quinson Holderness knows all about. 

After starting his career in surety over 15 years ago, Quinson has held multiple positions in underwriting and has managed both transactional and large commercial surety business. He’s spent the vast majority of his career working for top surety companies, including UFG Surety. 

We sat down with Quinson to discuss what we need to know about commercial surety bonds, UFG Surety’s appetite and how the pandemic has impacted the surety market. 

What are some of the most common types of commercial surety bonds?

Holderness: License and permit bonds are by far the most common category of commercial bonds in the industry. Many bond types fall in the license and permit category, such as contractor license bonds, motor vehicle dealer bonds, mortgage broker bond, tax/fee compliance bonds and others. License and permit bonds are required by local ordinance or  by statutes and guarantee that a business will comply with laws and regulations as a condition of granting a license or permit to engage in a particular business or activity. 

It’s also worthy to note that at UFG Surety, we are expanding our commercial surety footprint and offerings. Feel free to contact us with any questions on commercial surety bonds.

What do we need to know about commercial surety bonds?

Holderness: As previously mentioned, license and permit bonds are the most common category of commercial bonds. However, there are several other category of bonds that fall under the commercial surety umbrella. Court/judicial, probate/fiduciary, public official, and miscellaneous bonds (including service contract/commercial contract bonds) are all categories of commercial bonds as well. We consider many types of commercial bonds in all of the following categories.

• Court/judicial: Bonds (plaintiff or defendant) that are required by the court and guarantee compliance with court rulings.
• Probate/fiduciary: Bonds that guarantee an individual designated by the court will faithfully handle another person’s affairs.
• Public official: Bonds that guarantee an elected or appointed public official will faithfully perform their duties of office.
• Miscellaneous: Bonds that do not fall into any of the other categories such as concessionaire, lost instrument and utility deposit bonds.
• Service contracts/commercial contract bonds (non-construction): Bonds that guarantee the performance of a particular service according to the terms and conditions of a contract. Commercial contract bonds also includes supply/install bond obligations which guarantee the supply or supply/installation of materials under a purchase order or supply contract. 

What can you tell us about UFG’s commercial surety appetite? 

Holderness: Historically, UFG Surety has not been a big player in the commercial surety arena but we are changing that approach. Now we are considering much larger bonds and offering greater capacity on additional commercial bond obligations. We are also considering programs for large commercial surety accounts. Again, please contact us if you have any questions on commercial surety bonds. We’re always happy to help.

Want to know more about how much a surety bond costs?

How has COVID-19 impacted surety and the bonding market?

Holderness: From a commercial perspective, we have seen a hardening in the market with some sureties changing their appetite on certain bond types. Specifically those in industries considerably affected by COVID-19 such as retail, travel and restaurants. These industries have been hurt as the pandemic has caused a decline in economic activity. Even so, we will continue to use our underwriting tools and expertise to consider a variety of accounts. 

Quinson Holderness is a senior commercial surety underwriter at UFG Surety. He is an expert on all things commercial surety bonds. Please contact Quinson with any questions you may have: qholderness@unitedfiregroup.com.