An independent agent’s guide to contract bonds

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Contract bonds are essential for many construction projects – and they don’t have to be complicated. JM Wilson surety manager Ryan Streit discusses how agents can navigate contract bonds with confidence

IF YOU'RE an insurance agent with contractor clients, you’ve probably come across contract bonds, even if you don’t handle them regularly. These bonds are often a requirement for construction projects, ensuring that contractors fulfil their obligations. While they might seem complex at first, agents don’t need to be experts to help their clients secure them. Partnering with a managing general agent (MGA) can make the process smooth and straightforward – and for JM Wilson, this is a key element of its work with agents. Ryan Streit, surety manager at JM Wilson, emphasizes that agents who work with contractors will likely encounter contract bonds at some point. “If insurance agents have clients who are contractors, they will likely run into this type of work,” he says. “An MGA like JM Wilson has long-standing relationships with a number of markets to ensure better success in securing coverage.”

Founded in 1920, JM Wilson is a managing general agency (MGA) and surplus lines agent specializing in commercial transportation, property and casualty, professional liability, personal lines, and surety bonds. With a strong focus on service and expertise, JM Wilson partners with independent insurance agents to provide access to markets and underwriting support for hard-to-place risks. The company offers a full suite of surety solutions, including contract and commercial bonds, and has built trusted relationships with carriers to help agents secure the right coverage for their clients. Headquartered in Michigan, JM Wilson serves agents across multiple states with dedicated, knowledgeable teams.

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“We know that insurance agents can be overwhelmed by [the complexities of contract bonds] because it’s not something they normally deal with. We want to let them know that we’re the expert – they don’t have to be”

Ryan Streit, JM Wilson

By understanding the basics of contract bonds and knowing when to bring in an expert, agents can easily expand their services without having to navigate the complexities of surety bonding on their own.

A contract bond is a type of surety bond that guarantees a contractor will fulfil the terms of a construction contract. These bonds are often required by municipalities and general contractors to protect public and private investments. There are several types of contract bonds, but the following are the most common:

Understanding contract bonds

Published Mar 24, 2025

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“If you can get the bonds in addition to handling the general liability and other types of insurance, you can be a one-stop shop and become the client’s go-to for all of their business”

Ryan Streit, JM Wilson

Bid bonds: These ensure that a contractor submits a serious and accurate bid. If they back out after winning, the bond covers the difference between their bid and the next lowest bidder. Performance bonds: These guarantee that a contractor completes the project according to contract terms. Payment bonds: These ensure that subcontractors, suppliers, and laborers are paid appropriately.

“Most of the work that requires contract bonds is standard trade work such as fixing sidewalks, repaving asphalt roads, building renovation, or bridge construction,” Streit explains. “There are also some service-type contracts, which include providing IT services, tree trimming, and landscape maintenance.” Government-funded projects drive a significant portion of the demand for contract bonds. “There are a lot of federal dollars that are being passed to states, counties, and towns so they have money to do improvement projects,” Streit says. “That trickles down to bonds, as most municipalities will require that.” What this means for agents is that as long as public infrastructure projects continue, the need for contract bonds will remain strong.

For agents unfamiliar with contract bonds, the process may seem intimidating. But Streit reassures agents that they don’t need to be bonding experts – that’s what the JM Wilson surety underwriters can handle for them. “In fact,” says Streit, “JM Wilson was founded in 1920 when James M. Wilson opened his doors selling bonds in Kalamazoo, Michigan.” The key is to provide a complete submission up front. If a client needs a contract bond, agents should gather all necessary underwriting information and send it to their MGA as soon as possible. Streit notes that agents will often be on a time crunch, and for a bond to be secured within the same day, complete information becomes critical. “My best advice is to get us all information, and ensure it’s complete,” he says. “We’ll sometimes see partial submissions, and that can slow down the process.”

How agents can navigate contract bonds

Additionally, because each surety carrier has its own guidelines for evaluating a risk, working with an MGA like JM Wilson – which already has established relationships with multiple carriers – can make a big difference. “Each carrier underwrites a little differently, and over time we’ve established which carriers are more willing to make some exceptions, or whether it’s as big of an underwriting factor for a specific carrier,” Streit says. “We also have more success if we’ve worked with this contractor before. That way, we can reassure carriers that the project is something within their specialty; or if it’s something outside of their wheelhouse, we can help explain why it may or may not be a good fit.”

Even if an agent doesn’t specialize in bonds, offering them can be a valuable way to deepen client relationships and expand business opportunities. As many contractors prefer working with one trusted insurance provider who can handle all their needs rather than juggling multiple contacts, having contract bonds as part of your service offering can go a long way in increasing your reach. “This really is the way to complete the package for your clients,” Streit says. “Again, you don’t need to be an expert in bonding,” he emphasizes. “We can help with that until you’re more comfortable along each step.” To find out more about JM Wilson and its surety services, click here.

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