As a business owner, you have probably purchased worker’s compensation insurance, general liability insurance, cyber insurance, and any other type of commercial insurance that your business needs. However, have you thought of purchasing bond insurance or surety bonds? If this is something new to you, Birdsong Agency Inc. of Snellville, GA breaks down the bond insurance for you.
Definition of Bond Insurance
A surety bond is an agreement or contract between three parties, including the principal (the individual buying the bond), the surety (the company writing the bond), and the obligee (the department that requires the bond). A surety bond is not bought to cover claims. Instead, it provides a financial guarantee or stability to the organization or entity buying it.
How Does Insurance Bond Work?
A surety bond is like a type of insurance. If a business owner fails to meet the requirements of a bond, like failing to pay a vendor, a claim might be filed against that bond. You can think of an insurance bond as a type of credit to the principal.
Which Insurance Bond Do You Need?
Because businesses have different needs, then it is only reasonable that each will need a different type of bond. However, there are three types of surety bonds you may require when undertaking business.
- License and permit bonds- Some professionals may require these types of bonds to operate legally. For instance, freight brokers, licensed contractors, and auto dealers are a few examples of professionals that may require a license and a permit bond.
- Contractor bonds- Businesses or individuals that work on public construction projects are likely to need a contractor bond.
- Court Bonds- Certain courts may require these bonds for different reasons.
Like most people, business owners in Snellville, GA may find it hard to determine which type of bond they need. If you are in this predicament, contact Birdsong Agency Inc., where we can help you choose a bond that will protect your business’s interests.