Bonds can provide benefits for your business and help you build trust with your clients. In some circumstances, they may be required.
Businesses may need two common types of bonds: surety bonds and fidelity bonds. Surety bonds provide assurances that you will fulfill your contract or follow applicable regulations, while fidelity bonds insure against your workers’ dishonest acts.
The knowledgeable team at General Insurance Services of Asheville, Inc. can assist you in obtaining the bonds that are right for your business. Contact us today to get started.
Surety bonds are an agreement among three parties:
- The principal is the party that buys the surety bond.
- The obligee is a private or governmental party that requires the principal to secure a bond.
- The surety is the entity, such as an insurance company, that underwrites the surety bone.
The obligee may file a claim against the bond if a principal doesn’t adhere to the surety bond’s terms. Then, if the situation cannot be remedied with the principal, the surety may provide financial compensation to the obligee. If that occurs, the surety will typically seek reimbursement from the principal for that payment.
Surety Bonds Types
Several types of surety bonds are available, including commercial bonds and contract bonds.
Commercial bonds provide assurances that a business will comply with specific laws and regulations. For example, license and permit bonds provide assurances a company will follow requirements applicable to its industry.
Contract bonds provide guarantees a principal will fulfill a contract according to its terms, and in some situations, specific bonds may be required before a construction project may begin. Examples of contract bonds include:
- Bid bonds guarantee a contractor will begin a project if they win the contract. They also guarantee a contractor submitted a bid in good faith.
- Performance bonds provide assurances that a business will complete a project in according to the contract’s terms.
- Payment bonds guarantee contractors will pay subcontractors and suppliers for their work and materials.
- Maintenance bonds guarantee that a defect in workmanship or materials will be fixed. These bonds are usually effective for a set time frame (e.g., 12 months or 24 months).
Other types of contract bonds may be available. Reach out to your General Insurance Services of Asheville agent for more information.
Fidelity bonds are a type of business insurance that may financially protect against specific dishonest acts. Two kinds of fidelity bonds include:
- First-party fidelity bonds may cover acts of employee dishonesty (e.g., fraud, forgery, theft).
- Third-party fidelity bonds may provide coverage for dishonest acts by individuals working for your business on a contract basis.
Contact Us Today
The professionals at General Insurance Services of Asheville can help you get the bonds you need. Contact us for more information.