On behalf of the National Association of Surety Bond Producers (NASBP), a national trade association of surety bond producers, whose membership includes licensed bond producers placing bid, payment, and performance bonds with contractors performing public transportation work in Kansas, I am contacting you to express our concerns regarding proposed requirements in Section 107.10d(4), which, when read with other proposed sections, specifically, the provision on indemnity, may act as significant deterrents to sureties wishing to write surety bonds for transportation projects in Kansas. Specifically, proposed Section 107.10d(4) reads as follows:
“Surety Liability. The insurance requirements under this subsection 107.10 and subsection 107.11 are performance obligations under the Contract and Contract Bond. If the Contractor fails to maintain the required insurance, the Secretary will declare the Contractor in breach of contract under subsection 108.9 and prevent the Contractor from performing any work until such insurance is in place. If the Contractor fails to maintain the required insurance, the Surety shall be liable for any damages that the required insurance would have covered.”
The last sentence of that provision, in effect, turns the surety into a liability insurer for the project, ignoring fundamental distinctions between surety bonds and insurance polices.
NASBP Letter Addressing Locality Requirements in VA Bid Bond