Surety bonds are an essential part of the construction industry, enabling contractors to bid on work and providing project owners with confidence that a job will be completed according to set terms.
However, as they fulfill these responsibilities, contractors face significant challenges, including escalating material prices, labor shortages and tighter financial conditions. Without strong financial systems and disciplined project management, issues such as poor cash flow, inadequate planning, overextension or subcontractor performance problems can jeopardize a contractor’s ability to meet their bond obligations.
“Contractors are selling something before they really know what it’s going to cost,” says Tim Holicky, a senior executive underwriter at The Hartford. “You need a relationship where the agent or broker and surety company can be a holistic resource for contractors and the risks they undertake.”
Data from The Hartford's Global Insights Center shows construction industry spending on power projects is positioned to grow by more than 10% and could reach $150 billion.1 According to Holicky, the best outcomes for these projects depend on strong surety relationships that last throughout the life cycle of the bond.
Why Relationships Are Central to Surety
Construction surety bonds are not simply transactional products. They function best as long-term partnerships between the surety, the agent and the contractor. Strong relationships build trust, allow partners to identify potential problems early and encourage open discussions about risk. This collaborative approach can lead to:
- Greater bond capacity
- More competitive rates
- Faster approvals for new opportunities
- Fewer claims
- Smoother project completion
- More consistent bonding availability for future work.
A strong relationship enhances the prequalification process that evaluates if a contractor is prepared financially, operationally and strategically for a new project. Effective prequalification includes:
- An evaluation of financial strength and working capital
- Backlog and job mix
- Management experience and organizational structure
- Accounting systems and project controls
- Subcontractor quality and risk transfer practices
- Cash flow health and credit availability
The First Meeting Sets the Tone
The best surety relationships start with the introduction, making good first impressions especially important. During that meeting, contractors should expect:
- Respect: All parties should arrive early, remain present and engage fully. Listen carefully and take notes, so everyone leaves with all the information they need. “One of the most frustrating things clients share with underwriters is that they're constantly repeating themselves,” says Holicky. “They don't feel like all the partners are listening.”
- Preparation: Surety companies that research a contractor’s website, history, business model and project experience demonstrate credibility and genuine interest. This genuine interest signals commitment and helps establish rapport from the outset.
- Coaching: Contractors should feel confident that their agent and surety are committed to their success. That includes early guidance on project selection, systems and controls, risk tolerance and managing aggregation. Sureties can also connect contractors with internal resources like risk engineering teams.
Maintaining Relationships Over Time
Agency partners play a critical role as the bridge between contractors and sureties. They facilitate transparent communication and problem-solving, foster trust, navigate industry challenges and drive long-term business planning.
As projects progress, any number of challenges can put a contractor at risk. Sureties may be able to help, especially when notified early. For example, sureties often act as a second set of eyes, identifying subcontractors with a history of performance or payment concerns.
“Generally, the sooner we know about trouble, the more options there are to solve it or mitigate it,” Holicky explains. “A candid relationship with a surety can help reduce the incident of loss or, in some cases, help avoid it altogether.”
Three practices that can help maintain relationships and foster successful communication include:
Consistent Check-Ins
Frequent touchpoints between contractors, brokers and surety representatives are important to keep current on any potential risks before they escalate. At least annually, if not more often, partners should meet with a structured agenda. More immediate communication is necessary to:
- Disclose cash flow concerns or loss of key team members
- Share project delays, cost overruns or disputes
- Identify negative trends such as declining backlog, missed bids or potential defaults
Regular Jobsite Visits
A site visit to a construction project often happens at the beginning of a relationship, but it shouldn’t end there. Continued check-ins can help assess organization, safety and risk management practices, while strengthening personal rapport.
“You can tell a lot about a contractor by going to a jobsite,” says Holicky. “You learn how they manage activities in the field, how they treat their people and how things are constructed. And if you can grab a cup of coffee with a contractor on the site, you get a chance to learn their story.”
Reviews of Work in Progress
A work-in-progress (WIP) report is a key forecasting tool that evaluates completion, profitability and cash flow across projects. Regular WIP conversations help sureties evaluate capacity, work and bidding strategy.
“It’s the most vibrant way for us to manage the capacity we extend to a contractor,” says Holicky. “There’s great value in contractors producing that information at regular intervals so we can serve them effectively.”
Partnerships That Last
The construction industry has a high rate of failure, notes Holicky. Ultimately, if a contractor struggles significantly or runs out of cash, there were likely avoidable missteps early in the process. By working together, sureties, agents and contractors can share essential information, access sophisticated resources and position themselves for successful project completion and future growth.
The Hartford’s dedicated bond division meets the needs of customers and brokers by building long-term relationships rooted in superior service, support and expertise. To learn more about surety bonds for contractors, explore our surety bonds offerings.
1 The Hartford, “Global Insights Center: Year Ahead 2026,” viewed February 2026
