If you've decided to open a business or have recently begun operating one, you may be in need of a surety or fidelity bond—but, how do you know whether you need a bond and, if you do, which one you need?
Two Types of Bonds: Fidelity and Surety
Businesses in the service industry that have employees handling client property or working on the client’s premises can benefit from fidelity bonds. Fidelity bonds protect against losses due to fraud or dishonesty and can be used to cover all employees or select individuals. Fidelity bonds pay for losses that might not normally be covered in a commercial insurance policy.
Surety bonds offer an assurance of compliance with contractual obligations and are a mainstay in many industries including construction and manufacturing; should a contractor want to secure a large client or a government-funded project, a surety bond is a must. Surety bonds are also used very often in professions that require license, such as the restaurant and auto sales industries.
Government and Client Requested
In some industries, the government may require business owners to have a bond. One example of this is the limited liquor license requirement for a bond. When you get a limited liquor license, you are attesting to the fact that only a certain percentage of your business will come from liquor sales. In order to get your license, this guarantee must be backed by a bond.
In other cases, a client may request that you have a bond. Contractors and manufacturers working on government projects will be required to have surety bonds that guarantee job performance. Sometimes, a non-government client may request that a contractor, manufacturer or other service provider have a bond in place to protect them. Clients that hire housekeepers and other service professionals might only do so from companies that are bonded.
If you aren't sure how your business can benefit from bonds or whether they are required for your industry, give us a call at 214-824-8888 . We can help you protect yourself and your clients with the right fidelity or surety bond and business insurance policies.