Bond Insurance for Small Business
It’s very important that you know how to get bonded and insured for a small business, because it’s likely that most of your competitors are already there, and that would give them a leg up on you, if your own business isn’t insured and bonded as well. Consumers who do business with a company generally prefer having the kind of assurance provided by bonding and insuring, so they know they won’t lose their money if work isn’t completed satisfactorily. That is a powerful incentive for choosing one one business over another, so it’s to your advantage to understand the whole bonding process, and to make sure your business is covered by it.
What is a Surety Bond?
In essence, a it is a contractual agreement between three parties which are known as the surety, the obligee, and the principal. The principal (which would be your business) purchases a bond to provide the customer (which is the obligee) some measure of confidence that any work performed will meet the standards of performance identified in the bond, and will conform to any rules or regulations which govern that kind of work locally.
If there are time constraints involved in a specific project, that might also be identified among the terms listed in the bond. In this arrangement, the surety company sells the bond to a principal, and if the principal fails to live up to the bond’s terms, the obligee would have the right to make a claim against the bond, which the surety would be obliged to pay out.
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How Do They Work?
Simple… they work in a manner very similar to insurance, except that someone’s death is not the triggering event which enables a claim to be made against the ‘policy’ – in this situation, a claim can be made when the principal fails to meet the standards of workmanship expected, or fails to complete the project at all. The party who gets ‘insured’ by a bond is the obligee, which is the customer who hires a principal, i.e. the contractor or company, to do a body of work.
If the contractor should abandon the work, or complete it in an unacceptable manner, the hiring party would have the ‘insurance’ policy available to make a claim against, so that financial restitution could be had in lieu of the poor workmanship. Any valid claim which is made against the bond would be paid out by the bonding company, and then it would pursue the contractor to be fully reimbursed for the inadequate work performance.
Insurance and Bonding for Small Business
There are two basic kinds of sureties, although there are literally hundreds of sub-types among these broad categories. Contract or construction bonds are one type, and commercial bonds are the other category. If a company/operation is not involved in the construction business in any way, it is likely that some kind of commercial bond would be appropriate for your business. The types of commercial bonds available are too numerous to be listed, but a quick online search will reveal the hundreds of types which can be purchased, and one of these is sure to fit your operation.
Industries Which Require Sureties
All industries can take advantage of being bonded, because all consumers like to know that they won’t completely lose their money if work is unsatisfactory. However, some of the biggest users of bonds are the construction industry and the various levels of government, which are required to have as much certainty as possible in hiring contractors, so as to safeguard taxpayers’ money.
Benefits to Being Bonded
One of the biggest benefits of having your venture bonded is that it can keep you competitive in the marketplace for whatever industry you happen to be in. If your rivals are insured and bonded and your operation is not, it is quite likely that your competitors will be selected far more often than your company will be.
Since a great many of your potential customers are not going to know about your reputation or about how professional your service is, they might have nothing to provide them with any certainty of quality workmanship – unless you are properly bonded. If your operation is insured and bonded, that then becomes a selling point which you can use to advantage in marketing and advertising campaigns, so that you can appeal to the reliability aspect of your company.
How you can get Insurance and Bonding for Small Business:
If you’re wondering how to get bonded and insured for a small business, there’s one very quick, reliable answer – contact NFP Surety. NFP is one of the largest and most reliable bonding companies in the country, and we are sellers of both bonds and insurance policies, especially to new or smallish operations. Whatever kind of venture you may be in, we can issue a bond which will cover it, and since we’re authorized to sell in all 50 states, we can handle all your bonding needs wherever you may be located. Contact us today, and stop losing money and work to your bonded rivals.