Do you need to provide your clients with financial security before they will hire you for a project? Bonds can provide a guarantee that you can be trusted to carry out the duties you are appointed to with honesty and dependability. Not to be confused with insurance, bonds are securities that work more like a line of credit. They back up your promise to perform your job and guarantee recompense if you in some way default on an agreement.
In some cases, they are voluntary; in others, they are expected and perhaps mandatory. Here at Lillie-Couch Insurance, we offer two primary types of bonds – surety bonds and fidelity bonds. We can help you evaluate which type(s) of bonds you or your business might benefit from most.
Surety Bonds
A surety bond gives your client assurance that you will assume responsibility if you are liable for a loss. If a claim is made against your business due to a breach in contract, the bond guarantees that you will pay. Ultimately, the bond issuer is assuming financial responsibility if you default on a claim, but your corporate and individual assets may be acquired as collateral should you fail to pay.
Since bonds are a risk for the issuer, your assets, income, and risk exposure will be carefully assessed to determine your ability to uphold your agreements. Our job is to help you find the bond that provides you with the assurance you need and the type of bond that best serves your business.
Examples of common surety bonds include:
Bid Bonds
Bid bonds may be required to ensure that a contractor will sign a contract and agree to perform a job according to the bid price.
Performance and Payment Bonds
Once a bid is won, performance and payment bonds assure the client that the bidder will pay vendors in a timely way and perform the duties of a particular job exactly as outlined in their contract.
Public Official Bonds
These bonds are used to guarantee the performance and integrity of those appointed or elected to public office.
Fiduciary Bonds
These bonds assure that the executor of a will, trust, estate, or other legal entity will not in any way defraud its beneficiaries.
Fidelity Bonds
Unlike surety bonds, which work more like a line of credit, fidelity bonds work more like insurance. These types of bonds guarantee the honesty of an employee. If an employee commits fraud or theft against you or one of your customers, the fidelity bond helps cover the losses.
Fidelity bonds are typically chosen to cover entire groups of employees or otherwise chosen to cover only a select few employees, such as those with questionable behavioral backgrounds. Once a bond is in place, both you and your customers are covered if an employee embezzles cash from your business or one of your workers steals an expensive diamond ring from a customer’s home.
Surety and Fidelity Bonds in Clear Lake, WI
Many types of businesses need to be bonded. We here at Lillie-Couch Insurance enjoy helping local business owners and individuals find out more about bonding and the many ways it can boost client perceptions about a business. For more information or to find out if you are eligible for a bond, contact our office. We look forward to serving you soon.
