worldexecutivesdigest | What Kind of Surety Bonds Are Provided By Bond Companies? | If you’re looking for a surety bond, you’re likely to be wondering what types are available. A company provides a range of services, so it’s essential to understand the available types.
This blog post will discuss the various surety bonds that a company offers. In addition, it will provide some information on how to obtain a surety bond.
1. Contract
It is a surety bond required to protect the owner if the contractor defaults on the agreement.
The surety company will provide a financial guarantee to the owner that the contractor will fulfill their obligations under the contract. If the contractor does not fulfill some obligations, the surety company will pay damages to the owner up to the bond amount.
A contract bond is a common type required in many construction projects. It involves details like:
-Penalty amount
-Time frame
-Claim procedures
For example, the claim procedures may include that the owner must notify the surety company within a specific time frame if they believe the contractor has breached the contract.
2. License and Permit
When you need to get a business license, there’s usually a surety bond involved. The need is to protect the consumer from any unethical behavior by the business owner while the business is in operation.
If you’re thinking of starting a business, check with your local chamber of commerce or licensing board to see if you need to get bonded.
Some businesses which need to be bonded are:
-Auto dealers
-Construction companies
-Daycare providers
-Employment agencies
-Food service businesses
-Funeral homes and directors
-Janitorial services
-Locksmiths
-Management consultants.
3. Court
If you must post one, this is also called a probate bond. It is one of the types of surety bonds required to administer an estate. The need is to protect the interests of the estate’s beneficiaries.
If you’re appointed as executor or administrator of an estate, the court will require you to post one. The amount will be set by the court and is based on the estate’s value. The bond must be posted with the court before you begin administering the estate.
The surety company that provides the bond will be responsible for paying any claims made against it.
4. Fidelity
Fidelity bonds protect an employer from losses due to employee dishonesty. These cover employee dishonesty, financial institutions, or crime insurance.
They are not the same as commercial performance surety bonds. Commercial surety bonds guarantee the performance of a contractor or other professional according to the terms of their contract.
Fidelity bonds are usually written on an “all-risk” basis, meaning that any loss due to the dishonest acts of an employee is covered unless expressly excluded.
Dishonest acts can include theft, forgery, embezzlement, and fraud. They can be purchased as standalone policies or part of a business owner’s policy (BOP).
They are an essential tool for mitigating the risk of employee dishonesty. By ensuring that losses due to dishonest acts are covered, it can help protect your business from financial ruin.
Conclusion
Surety bonds are essential for many businesses, and choosing the right company is essential. Therefore, it is crucial to verify the licensing and credentials of the company you are considering. You should also ask about their experience providing the type of surety bond you need.
