Smarter Surety Bonds
Save up to 35% on your surety bonds insurance
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Rated 5 stars
As Featured In
Rated 5 stars
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What are Surety Bonds for Businesses?
Surety bonds do not function quite like traditional insurance, but are actually a 3-way contract. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee). There are numerous types of surety bonds available, but the most common types to insure are for construction projects, and for cleaning corporations that bond their staff when working on a third-party work site. Remember, surety bonds don’t work like traditional insurance. The surety company does not expect to have any claims if they underwrite the policy properly so they do expect to be repaid for any guarantee they’ll have to pay on a principal's behalf.
Who Needs Surety Bonds?
Surety bonds are usually recommended for contractors and businesses in the construction industry and in the cleaning industry. They may be contractually required based on the agreement between a business and its client, but may be beneficial for a project even if not required.
Examples of Surety Bonds Insurance Claims
Out of business
Bonds to protect against employee theft
Surety bonds is different from typical insurance
A construction company was contracted to complete a building job; unfortunately though, they went out of business before they could complete it. Thankfully, since there was a bond in place, the surety company helped hire a new construction company to finish the project.
Frequently Asked Questions
Why Should You Get Surety Bonds?
Surety bonds not only offer an added level of protection, but they are sometimes contractually required. They can protect the obligee and provide the ability for large or lengthy projects to get going without the need for all the money up front.
What Can Affect the Price of Surety Bonds Business Insurance?
The price of a surety bond is often determined by the type of bond or classification ,the guarantee that has been made, and the limit that the bond will cover. A bid bond may be expensive depending on the price of the project, whereas a bond for a small cleaning company may be significantly less costly.
When Should Businesses Purchase Surety Bonds?
Bonds are often required by contracts; they should be purchased before starting any work. Depending on the type of bond, the financial state of the organization will be underwritten to ensure the principal has the ability to fulfill the obligation. Fidelity Bonds for a cleaning company or a License and Permit Bond for a contractor can be done in minutes. However, Construction Bonds, such as Bid Bonds, Performance bonds or Labor and Material bonds, are not as easy.