Adverse Selection in Surety |AmeriPro Surety Bonds
In surety bonds, the vast majority of bonds are required regardless of who you are, if you wish to obtain the appointment, the license or permit, the contract, or to meet a Court Order.
While significantly fewer in number, other surety bonds are only required if you do not meet certain requirements. These requirements may refer to:
- Your net worth;
- History in a business;
- Finances on hand (either individually) or as part of a business;
- Years of experience;
- Other qualifications as may be determined by the entity which requires surety.
Such surety bonds are referred to as adverse selection. A functional definition of this term is that a surety bond that is adverse is only required if you do not otherwise meet the requirements of the obligee (which is just a fancy-sounding word for the entity which requires you to obtain surety).
Surety bonds which are adverse selection allow you to participate in an industry from which you would otherwise be excluded because you do not meet their standard conditions.
It is important to know that for a surety bond that is adverse, you are treated no differently in terms of qualifying: There is an application, a review by an underwriter, and a credit score inquiry check.
But to be candid, if you require a surety bond which is a consequence of adverse selection, having good credit is crucial.
As with life in general, without good credit, you will either be denied for the surety bond outright, or the premium will be so high that it will prevent you from moving forward with the purchase.
And the failure to obtain a surety bond which is required as a result of adverse selection, effectively excludes your participation in that industry.
AmeriPro Surety Bonds is a surety bonds-only agency which provide license and permit, Court, probate, and other surety bonds in all 50 states.