Bonds

Your business strives to provide reliable and consistent services but may encounter scenarios in which doing so is impossible. Unfortunately, regardless of commitment to safety and due diligence, you may eventually need to manage the financial fallout of situations where you’ve come up short. These circumstances can quickly and effectively demonstrate the importance of purchasing and maintaining bonds.

What Are Bonds?

Bonds can be critical to your company’s risk management and loss control efforts. Often sold by insurance companies, these financial instruments can safeguard the fiscal interests of both your business and other parties with whom it works, including clients and customers. If your bonded company fails to fulfill its obligations or provide adequate services, these measures can help other parties recoup their losses.

How Do They Work?

Bonds may come in many forms. Surety bonds are among the most common and may include many subsets, such as license and permit bonds, construction bonds and contract bonds. While exact parameters, they typically establish agreements between the following three parties:

• The principal, such as your business, is responsible for purchasing bonds.
• The obligee, such as your client or customer, may deem bonds necessary to protect their interests.
• The surety, such as an insurance company, underwrites and maintains the bonds you purchase.

Once acquired, your bonds can act as potential compensation for the obligee. Should you fail to fulfill your duties, they can recover their losses through the bonds, at which point the surety can then seek reimbursement from your business.

Who Needs Them?

If your business provides professional services or advice, you should consult a qualified insurance professional about bond-related needs. Many bonds specifically tailored toward certain types of businesses, such as auto dealers, mortgage brokers and contractors, may be mandated. Additionally, many clients may require that your business be bonded before agreeing to work with you.

How to Get Bonds Near Me

Contact Affordable Insurance Group today to learn more about bonds and identify appropriate options for your business.