Bonds Quote Forms
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Bonds can be beneficial for your operations. They can protect clients’ interests, which can help you attract and retain them, and they may be required before your business can begin certain projects or obtain licenses or permits. Additionally, bonds can financially protect against employees’ dishonest acts.
The knowledgeable team at Amco Insurance in Katy, Texas, can help you secure the bonds that best suit your needs. Contact us
today to get started.
Surety and Fidelity Bonds
Two common types of bonds are surety bonds and fidelity bonds.
Surety bonds provide guarantees that your business will adhere to the terms of a contract or meet specific regulations. Three parties are part of a surety bond:
- The principal (e.g., your business) buys the surety bond.
- The obligee, a governmental or private party, requires the principal to purchase a surety bond.
- The surety (e.g., an insurance company) underwrites the bond.
If the principal does not comply with the surety bond’s terms, the obligee can file a claim against the bond. After the surety investigates the issue, and if the principal does not resolve it, the surety may compensate the obligee up to the bond’s amount. The surety will then seek repayment from the principal for that expense.
Types of Insurance Bonds
They are many types of surety bonds. Examples include:
- Licenses and permit bonds—These provide assurances that a business will comply with applicable laws and regulations. A governmental entity may require them before issuing a license or permit.
- Bid bonds—These provide assurances that a contractor will start a job if they are awarded a contract after a bid.
- Performance bonds—These guarantee a business will finish a project in accordance with the contract’s stipulations.
- Payment bonds—These guarantee contractors will pay subcontractors and suppliers for labor and materials.
- Maintenance bond—These provide assurances that a business will remedy a defect in materials or workmanship or that the project owner will be compensated up to the bond’s amount. Maintenance bonds are typically effective for a specified term (e.g., one year) following the completion of a project.
Other surety bonds may be available. Contact your Amco Insurance agent for details.
What Is Surety Bond Insurance?
The terms surety insurance, surety bond and surety bond insurance are commonly used, but surety bonds are not a form of insurance. Surety bonds are actually a form of credit. These bonds guarantee payment under certain circumstances. With a surety bond, the person purchasing the bond carries the risk.
Fidelity bonds are also known as employee dishonesty bonds. They are a type of business insurance that can help mitigate financial losses after employees’ dishonest acts, which can include:
Coverage for other dishonest acts may be available. Additionally, businesses may be able to secure fidelity bonds to cover the dishonest acts of volunteers or contract workers.
Bond Insurance Cost
The cost of purchasing a surety bond varies widely. In general, many people pay between 1% and 15% of the total bond amount. Premiums may be based on the company or individual’s credit status among numerous other factors.
The team at Amco Insurance can provide additional information on bonds and help you obtain the ones that are right for your business. Contact us
today to get started.