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What is an insurance surety bond?
A surety bond is a financial commitment by which an insurer (the surety) guarantees to a third party (the beneficiary) that the principal debtor — often a construction contractor — will meet its contractual obligations. In Quebec, it is commonly required for public tenders, obtaining an RBQ license and various government permits. Unlike traditional insurance, which covers unexpected losses, a surety bond guarantees the performance of a specific obligation. In the event of default by the debtor, the guarantor compensates the beneficiary, then turns against the debtor to recover the sums paid. This mechanism protects clients and clients while allowing serious contractors to assert their financial strength. In Quebec, surety insurers are supervised by the Autorité des marchés financiers (AMF).
How to quickly open a surety bond file in Quebec?
Some specialty brokers, such as those in the Assur360 network, have direct agreements with surety insurers (including Intact, Northbridge and Aviva). This authorization allows them to issue bond documents directly at their office, with no external processing delay. For small surety bonds under $250,000, no financial statement is usually required, which makes the process much simpler and faster.
- Fill out the application form — Your business information, type of bond required and amount
- Provide required documents — For amounts under $250,000, the documents are minimal; Beyond that, financial statements may be requested
- Receive your bond — Issued in a few hours for standard files
- Give the document to the beneficiary — Your broker will guide you on the exact form required
The 7 types of surety bonds in Quebec
There are several forms of suretyship, each responding to a specific situation. Here are the 7 most commonly used types in Quebec, particularly in the construction, trade and professional services sectors.
1. Bid Bond
The bid bond accompanies a bid in the context of a public or private call for tenders. It attests to the good faith of the bidder and its financial capacity to honour the contract if it is selected. This type of bond reassures the client and is generally a prerequisite for obtaining a performance bond.
2. Performance Bond
The performance bond guarantees that the contractor will comply with all the conditions of the signed contract. In the event of a defect — abandonment of the site, bankruptcy or failure to comply with specifications — the guarantor intervenes to complete the work or compensate the owner. This is the most common bond required for major construction projects.
3. Material and labour bonds
This bond protects the client against legal hypothecs that could be registered by subcontractors or suppliers not paid by the general contractor. It is almost always issued in conjunction with a performance bond and may be required by the Régie du bâtiment du Québec (RBQ) for certain types of work.
4. Maintenance Bond
The maintenance bond guarantees that the contractor will correct the defects and defects found after the provisional acceptance of the work, during the warranty period provided for in the contract. It offers additional protection to the client once the site has closed.
5. Permit and Licence Bond (FBB)
Required by the Régie du bâtiment du Québec to obtain or renew a construction contractor’s licence, this bond protects clients in the event of a breach of the contractor’s legal or regulatory obligations. It is usually issued for a term of 2 to 3 years and can be produced directly by a licensed broker.
6. Customs Bond
A customs bond guarantees the Canada Border Services Agency (CBSA) that the importer will pay the customs duties, taxes and fees owing on the imported goods. It simplifies and speeds up customs clearance for companies that regularly import goods and can replace the deposit of monetary guarantees.
7. Other Specialized Surety Bonds
Other forms of surety bonds exist depending on specific needs: judicial sureties (to secure obligations related to legal proceedings), fidelity sureties (to protect a company against the dishonest acts of employees), trust bonds, or personalized surety bonds according to the requirements of a particular client.
Why work with a broker specializing in surety bonds?
A broker specializing in surety bonds has simultaneous access to several surety insurers, which speeds up the issuance process and guarantees optimal conditions for your entrepreneurial profile. For construction companies, the link between a surety bond, RBQ license and civil liability insurance is direct and complex — a broker unifies these coverages to simplify your management. The broker’s fee is included in the surety bond premium at no additional cost to the client. In addition, a good broker prepares you for growth: he establishes a surety program that evolves with your bidding capacity over the years.
Frequently asked questions about surety bonds in Quebec
What is an insurance surety bond?
A surety bond is a contract with three parties: the surety (the insurer who guarantees), the principal (the contractor or company) and the beneficiary (the client or the government). The guarantor undertakes to compensate the beneficiary if the debtor does not comply with his obligations. Unlike traditional insurance, the guarantee involves a recourse: if the guarantor pays, he recovers the sums paid from the debtor. In Quebec, surety insurers are supervised by the AMF.
What is the difference between a bid bond and a performance bond?
The bid bond is issued before the contract is awarded: it guarantees that the successful bidder will sign the contract under the terms of its bid. The performance bond comes into play after signing: it guarantees that the contractor will carry out the work according to specifications, on time and on budget. Both are often required in sequence for large public or private projects in Quebec.
Do I need to provide financial statements to get a surety?
It depends on the amount of the deposit. For amounts under $250,000, most surety insurers don’t require a financial statement — the claim is processed quickly based on some general information about the business. For larger amounts, recent financial statements (usually 2-3 years) prepared by a professional accountant will be requested.
How much does a surety bond cost in Quebec?
The surety bond premium typically ranges from 1% to 3% of the bonded amount, depending on the type of bond, the contractor’s financial profile, and the duration of the contract. For example, for a $500,000 performance bond, the premium could be between $5,000 and $15,000. For an RBQ licence bond, the fees are usually fixed and low. The broker’s fees are included in this premium.
Does the RBQ require a surety bond?
Yes. The Régie du bâtiment du Québec requires a bond to obtain and maintain a construction contractor’s licence in certain subclasses. This guarantee protects customers against the contractor’s breaches. For more details, see the RBQ’s official page on surety bonds.
How do I open a surety bond file with Assur360?
It’s quick and easy. Brokers in the Assur360 network are authorized to issue surety bonds directly to several recognized surety insurers. All you need to do is fill out the application form, provide the basic information about your business, and your broker will take care of everything else. For standard files (less than $250,000), you can receive your bond document the same day.
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