Bonds can help build trust with your clients and provide other benefits for your business. In some cases, they may be required.
Surety bonds and fidelity bonds are two common types your business may need. Surety bonds provide guarantees that you will meet your contractual obligations or adhere to applicable regulations, and fidelity bonds provide protection against employees’ dishonest acts.
The knowledgeable team at Five County Insurance Agency in Fort Myers, Florida, can help you secure the bonds that are right for your business. Contact us today for more information.
What Are Surety Bonds?
A surety bond is a contractual agreement among three parties:
· The principal is the party that purchases the surety bond.
· The obligee is the party that requires the principal to purchase a bond. The obligee may be a governmental or private party.
· The surety is the entity that underwrites the bond (e.g., an insurance company).
If a principal does not follow the surety bond’s terms, the obligee may file a claim against the bond, and the surety may provide financial compensation to the obligee. If that occurs, the surety will typically seek reimbursement from the principal for that amount.
What Are Types of Surety Bonds?
There are several types of surety bonds, including contract bonds and commercial bonds.
Contract bonds provide assurances that businesses will fulfill the terms of a contract. They may also be required before work can start. Contract bond examples include:
· Bid bonds guarantee a contractor submitted a bid in good faith and that they will start a project if they win the contract.
· Performance bonds guarantee a business will finish a project in accordance with the contract.
· Payment bonds guarantee that contractors will pay suppliers and subcontractors for their materials and work.
· Maintenance bonds guarantee a defect in materials or workmanship will be remedied. These bonds are usually effective for a set term (e.g., one year).
Other types of contract bonds may be available. Contact your agent for more information.
Commercial bonds guarantee that a business will comply with specific requirements. For example, license and permit bonds provide assurances that a company will follow laws and regulations applicable to their industry.
What Are Fidelity Bonds?
Fidelity bonds are a type of business insurance that may help mitigate financial losses after employees’ dishonest acts, such as:
Coverage for these and other similar wrongful actions of volunteers or individuals working for your business on a contract basis may also be available.
Contact Us Today
The experienced professionals at Five County Insurance Agency can help you secure the bonds you need. We are proudly serving Bonita Springs, Cape Coral, Port Charlotte, Fort Meyers and the Naples area. Contact us today to get started.