As a business owner, putting certain protocols in place can help establish your trustworthiness and protect you from any claims resulting from dissatisfied clients. One of the best ways you can do this is to become bonded through surety bonds.
What is a surety bond and why is it important?
A surety bond is a third party contract between the owner, the customer and the surety, which operates like an insurance policy guaranteeing the work to be performed. A surety bond:
- Adds an extra layer of protection for the consumer
- Provides assurances for the quality of your work
- Helps the business enhance their reputation
There are a number of bonds available:
- Bid: this guarantees you will perform the work required if your company wins the bid.
- Performance: this guarantees you will honor the terms of the contract and perform the work as specified.
- License: this is when a bond is required by the state in which you conduct business.
- Indemnity: this can reimburse any losses as a result of poor performance or when failing to pay other vendors throughout the terms of the contract.
- Payment: this assures you pay all material providers and subcontractors used in the performance of a contract.
Is a surety bond required for my business?
Depending on what type of business you operate, it may be a requirement of the law. Companies that deal with money or work in construction may fall under this classification. Your local government office should give you a better idea of whether you must be bonded.
Whether your company is bonded or not, it is always good to have business insurance. Carrying a commercial insurance policy also provides protection against liabilities and other unforeseen circumstances.
How can I obtain a surety bond?
Contacting your independent insurance agent is the first step in obtaining a surety bond to get quotes. There is certain criteria you must meet to determine your rates. The surety bond market is very competitive, and it is possible to pay a higher premium due to high claims or less than stellar credit.
Having surety bonds or insurance is good business, plain and simple. Be proactive and explore these options today!
Is your business bonded? Call Area Insurance Services at 432-570-4373 for more information on surety bonds.