How to Get a Surety Bond in Ontario: Step-by-Step Guide
To get a surety bond in Ontario as a new contractor, you apply through a licensed insurance broker, the surety underwrites your character, capacity and capital, and you sign an indemnity agreement before the bond is issued. This guide covers contract surety bonds for construction (bid, performance, and labour and material payment bonds), not bail or court bonds, and with a complete file first-time bonding can often be in place in about a week.
Starting a new business in Ontario is an exciting milestone, but it often comes with a significant hurdle: proving your credibility to clients, municipalities, and the government. For many industries, from construction and renovation to specialty services, the solution is a surety bond.
Unlike traditional insurance, which protects you, a surety bond is a three-party guarantee that protects your client by ensuring you will fulfill your contractual obligations. If you are a new business, getting bonded can feel like a "chicken-and-egg" problem: you need the bond to win the work, but you need work history to get the bond.
At Roughley, we believe insurance doesn’t have to be complicated. We specialize in helping new ventures navigate this process to build a strong foundation for growth. Here is your step-by-step guide to securing your first surety bond in Ontario.
Step 1: Partner with a Specialized Broker
In Canada, surety bonds are almost exclusively purchased through licensed insurance brokers. While many people start with their general agent, new ventures benefit from a broker with deep expertise in commercial and specialty markets.
At Roughley, the process starts with a personalized consultation. We act as your strategic partner, helping present your new business to underwriters in the best possible light by focusing on your professional experience and future goals.
Step 2: Understand the "Three Cs" of Bonding
Underwriters evaluate new ventures based on three specific criteria known as the Three Cs:
- Character: Your personal and professional reputation. Do you have a history of integrity in your previous roles?
- Capacity: Your technical ability to do the job. For a new business, underwriters look closely at the past experience you and your team members gained while working for others in the industry.
- Capital: Your financial strength. Since the business is new, this often includes your personal net worth and available lines of credit to ensure you can weather the early stages of a contract.
Step 3: Gather Your Documentation
Preparation is the key to a fast approval. For a new venture, you will typically need to provide:
- Resumes of Key Personnel: Highlighting the technical expertise and years of experience you bring to the new firm.
- Personal Financial Statements: Since the company's balance sheet is fresh, your personal financial stability acts as the initial foundation.
- A Business Plan or Project List: A clear outline of the types of projects you intend to bid on and your projected growth.
- Reference Letters: Confirming your technical success and reliability in previous industry roles.
Step 4: The Underwriting Review
Once your application is submitted, the surety company conducts a deep dive into your professional background. They may ask for additional information regarding your supply chain or equipment. Our team at Roughley supports you through this entire process, ensuring any underwriter questions are answered clearly and professionally.
Step 5: Sign the Indemnity Agreement
Before the bond is issued, you must sign an Indemnity Agreement. This is a legal commitment that if a claim is made against the bond due to a failure to perform, you (and often the business owners personally) will reimburse the surety for any losses paid out.
Step 6: Bond Issuance
Once the paperwork is signed and the premium is paid, the bond is issued. For new contractors, we often help establish a Bonding Facility, which acts like a pre-approved credit line for your future bonding needs, allowing you to bid on multiple projects with confidence.
Why Get the Roughley Advantage?
Don't let the bonding process slow down your momentum. We are here to handle the complexities so you can focus on building your business and serving your clients.
Ready to get your new venture bonded? Call us at 905.576.7770 or visit our offices in Oshawa, Bowmanville, or Port Perry. We’ll help you build the credibility you need to win your first big contract.
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Frequently Asked Questions
Who can issue surety bonds in Canada?
Only insurance companies licensed to write surety can issue surety bonds in Canada. On Ontario public contracts, the Construction Act requires the bonds to come from an insurer licensed under Ontario's Insurance Act to write surety and fidelity insurance. Contractors buy them through a licensed insurance broker, who presents the file to the sureties whose appetite fits the contractor's size and trade.
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