4 Things You Didn’t Know about Surety

This put up is a part of a collection sponsored by Outdated Republic Surety.

Simply as property-casualty brokers know that insurance coverage is enjoyable and interesting, bond producers and underwriters discover surety to be enjoyable and interesting, too. Listed below are some little-known info you would possibly get pleasure from.

Darrel Lamb, Outdated Republic Surety regional vp, wrote an ideal weblog put up some time again, “7 Issues You Didn’t Find out about Surety.” Darrel hit the mark along with his little-known surety info, however he didn’t have area to jot down about every part that’s distinctive and fascinating about our business.

As they are saying in these late-night TV commercials, “Wait, there’s extra!” Listed below are 4 extra issues I wager you didn’t find out about surety:

1. Earlier than company surety, there was particular person surety

The earliest recognized surety contracts, courting again to historic Mesopotamia and Babylonia, had been all types of particular person surety. For hundreds of years, surety was a pledge between people, with a 3rd particular person agreeing to make good if a promise couldn’t be saved. The primary U.S. company surety, Constancy Insurance coverage Firm, wasn’t based till 1865. By the way, do you know that Outdated Republic Surety’s historical past goes again virtually as far, to 1869, once we had been a part of Northwestern Nationwide Insurance coverage Firm?

2. Early suretyship was used to implement the regulation

A type of joint suretyship known as frankpledge was used extensively in medieval England to compel suspected criminals to look earlier than a decide. Teams of 10 households, often called tithings, shared accountability for producing one in all their members in court docket in the event that they had been charged with a criminal offense. If the accused didn’t present up, everybody within the group might be fined. The Anglo-Saxon bohr system labored in a similar way, with one particular person (known as a “bohr”) standing in for an additional to bear accountability for the principal. Bail bonds are, in a way, a contemporary model of those early types of suretyship.

3. The Heard Act preceded the Miller Act

You’re most likely conscious of the Miller Act, a regulation handed by Congress in 1935 that requires a bond for nearly all federal public works initiatives. However do you know the Miller Act was preceded by the Heard Act of 1894? The unique act was designed to guard the federal government from contractors who would possibly turn out to be bancrupt earlier than finishing a challenge, and to make sure that subcontractors and suppliers can be paid. It was the primary time the federal authorities used company surety bonds to again privately contracted development initiatives. 4 a long time later, the Heard Act was changed by the Miller Act, which supplied stricter bonding requirements and established the present requirement of efficiency and fee bonds.

4. With out co-surety, the Hoover Dam won’t have been constructed

The Hoover Dam, constructed from 1931 to 1936, is an engineering marvel. On the time, it was the world’s tallest dam (726 toes), and it created the most important reservoir (Lake Mead) within the U.S. Think about writing a bond on this challenge, provided that such a big, unproven construction had by no means been constructed earlier than. It weighed 6.6 million tons and contained 4.4 million cubic yards of concrete. The $49 million challenge was so large that no single surety firm may underwrite it. It was the primary instance of using co-surety, the place surety corporations pool their sources to underwrite giant development initiatives. It required the most important bond ever written on the time, $5 million, and 24 surety corporations joined collectively to jot down it.

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