The Sovereign advantage

Non-bonded construction firms are 10 times more likely than bonded contractors to suffer insolvency at any given point in time.1 No matter how solid your construction plans, the reality is that sureties help protect your business. Whether you’re an owner of property being developed or a general contractor subcontracting work on a project, acquiring the right financial security is just the start. There’s so much value-add to your business when you work with a trusted, experienced surety partner.

Our national Surety team has decades of industry experience and a deep understanding of the risks and business challenges you face. We help mitigate the risks to your overall business while delivering the exceptional customer service experience clients expect. We not only provide a wide variety of contract, commercial and developer bonds, but can also help a contractor gain greater surety credit to meet their business needs.

 

Targeting: Small to mid-sized contractors
Specializing in:
  • General contractors
  • Subtrades
  • Heavy equipment contractors
  • Specialty contractors
  • Service contractors

Trusted partner

We collaborate closely with brokers, partners and contractors to ensure every seat at the table is aligned to support you. Whether we’re issuing a bond, offering risk solutions or providing guidance along the way, our national Surety team is committed to seeing Canadian contractors achieve success.

Fast and responsive

Our experienced underwriters are empowered with local decision-making authority to serve you better. Fast turnaround times on approval for bonds ensures prequalified contractors can meet their deadlines.

Solution oriented

No matter what risks your business faces, we’re licensed in all provinces and territories to provide a wide range of surety solutions. In addition to surety bonds, we offer comprehensive insurance coverages across all lines to meet the needs of your overall business, not just your projects on deck.

Coverages designed to protect your business

Whether you’re an up and coming contractor trying to obtain your first bond or an established contractor looking for an alternative market, we provide surety coverage to meet your needs.


Pre-qualification "Sunshine" Letter

Pre-qualification "Sunshine" Letter

A Pre-qualification “Sunshine” Letter is a letter, sent from a surety company to the owner, that confirms that the contractor has an established relationship with its surety company. This letter is requested prior to the tender stage by the owner/obligee and can include:

  • How long the facility has been in place with the surety company
  • Facility limits
  • Non-binding commitment that the contractor has the financial and technical qualification to complete the undersigned project

 

This letter doesn’t guarantee an offer of a bond, but it is an agreement of pre-qualification for a bond by the surety.

Bid Bond

Bid Bond

A Bid Bond is required at the tender stage of a project by the owner/obligee and is provided by the surety. It provides a guarantee by the surety to the owner that the contractor will enter into the contract (do the work) if they’re the successful bidder. It also provides assurance to the owner that they will be compensated, if the bidder fails to enter into the contract and they must contract with a higher priced bidder.


Instead of an irrevocable letter of credit or certified cheque, which can tie up financial resources, a Bid Bond provides an alternative security for a contractor to post with the owner.

Agreement to Bond

Agreement to Bond

An Agreement to Bond is required at the tender stage of a project by the owner/obligee and is provided by the surety. It provides a guarantee by the surety to the owner that it will provide a Performance Bond and a Labour and Material Payment Bond for the contractor, if the tender is accepted and a written contract is entered into. While this is not a bond as such, it is an agreement provided by the surety.

Performance Bond

Performance Bond

A Performance Bond is required at the construction stage by the owner/obligee. It guarantees to the owner that the contractor will complete the project according to the terms and conditions of the written executed contract. It also provides financial protection to the owner in the case the work is not completed according to the terms of the contract (i.e. the contractor defaults on their contractual obligations).


Instead of an irrevocable letter of credit or certified cheque, which can tie up financial resources, a Performance Bond provides an alternative security for a contractor to post with the owner.

Labour and Material Payment Bond

Labour and Material Payment Bond

A Labour and Material Payment Bond provides protection to the owner of a project (the obligee under the bond) by ensuring that funds released to the contractor are in fact being paid to the suppliers and subcontractors, therefore protecting the owner from legal actions of non-payment, such as liens.


Likewise, it also protects subcontractors and suppliers, who qualify under the bond, by guaranteeing that the contractor will pay them for the work and material provided on a bonded project.


A Labour and Materials Payment Bond is required at the construction stage by the owner/obligee alongside the Performance Bond. Instead of an irrevocable letter of credit or certified cheque, which can tie up financial resources, a Labour & Materials Payment Bond provides an alternative security for a contractor to post with the owner.

Maintenance Bond

Maintenance Bond

When a construction project is complete, no owner/obligee wants to be left with a sub-par structure. While not technically insurance, a Maintenance Bond operates like insurance in that it guarantees to the project owner that the contractor will correct any defects or compensate the owner for those defects in the case of defective material and/or defective workmanship.


A Maintenance Bond can provide additional protection for owners/obligees that require a maintenance period that is greater than the one year that is provided under a Performance Bond to cover defective material and defective workmanship.

Lien Bond

Lien Bond

There are a lot of different stakeholders involved in a construction project, such as owners, contractors, sub-contractors, and suppliers. With so many parties working closely together, there’s always the possibility of conflict. If a dispute arises, a stakeholder could file a claim of lien, which is a legal claim to property as security against money or services owed to them.


A Lien Bond is required during the construction stage to discharge a lien against real estate on which the project is being constructed. A lien bond is an alternative security that can be posted with the courts instead of cash, as the parties look for a resolution to their conflict.

1 Canadian Centre for Economic Analysis. The Economic Value of Surety Bonding in Canada: A networked agent-based economic assessment, August 2017. p.7

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