5 things you should know about bonds

1. Bonds do not have a legal requirement in all states of the US. If you are applying to work in a different city or state, you should check with local and state governments to see how the bond process may differ from previous work areas. Even if you are not legally required to have a bond to work, being bonded allows prospective clients and employers to see that you are a reputable company and for this reason may be more inclined to hire your business for their needs.

2. Surety bonds are not insurance for your company. Having a surety or fidelity bond is protection for your clients, employers, local government and the general public from mistakes or unethical work procedures that your employees may engage in. The bond does not pay your business, but rather if a legitimate claim is lodged with your surety bond provider, the bond will cover costs until such time as your business can reimburse them. Surety bonds are not available to you to compensate for anything, but rather as a safety net to prevent loss for those that are around you.

3. The surety company will perform rigorous checks into your company to ensure that they feel at ease in providing you with a bond. The surety company in giving you a bond policy is showing your prospective employers and clients that you are a reputable company that has all qualifications or licenses required, as well as a good working history of completed contracts or jobs and minimal defaults on previous bonds. If you do not have this history available, your bond premium may be higher, or you may not qualify to be provided with a bond at all. This rigorous checking is essential in the surety company lending their name to your business to say that you are capable of completing the project under the terms of the contract issued.

4. Defaults on bonds are sometimes unavoidable. If this happens to you, the company that has provided your bond will launch an impartial investigation to check the legitimacy of the claim. In some cases, project owners or clients can lodge incorrect claims, or just try to swindle money from your company. Your bond provider will do their best to ensure that this does not happen to you in investigating any claim to the full extent possible before settling any payments. If the claim is found to be legitimate, your bond issuer will in most cases come to you as the business manager and offer that you settle the debt. If you are unable to do so, the bond company will pay out all monies owed on your behalf before seeking reimbursement from your business.

5. Bonds are an important part of being able to protect those that you are working for, both clients and employers on all levels. Even though you can prove that you have trained your employees in legal issues, or you have utmost trust in your employees to behave ethically at all times, the surety bond says to an employer that if for any reason your employees do not uphold their positions, they are not burdened with any financial hold ups. 

 

 

 

 

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