EVER HEARD OF BEING BONDED?
Life is full of uncertainties.
If you find yourself in such then, right here, you are in good company.
The term bonded indicates joined securely to another more so by a legal agreement.
How is been bonded different from having insurance?
Bonded definition
The majority of the population has probably come across the term insurance {arrangement protecting against possible eventualities such as specified loss, damage, illness, or death in return for payment of a specified premium. Insurance covers liability.
Bond insurance, also referred to as financial guaranty insurance guarantees scheduled payments of interest and security in the event of a payment default by an issuer. Many companies have licenses that allow them to transact business under different regulations in variant states.
The main difference is which party gets restored. Insurance protects the company itself whereas bonds protect the person the company is working for.
Businesses get bonded by proving to a bonding company that it is trustworthy, and thus unlikely to steal from the customer. A surety bond would then ensure that the business would have access to a certain amount of money in case the business’ customer files a claim.
So if a contractor breaks a window, the homeowner could file a claim against the contractor’s bonding company to be reimbursed. Since the contractor I the policy bearer, the claim would have to be paid to the contractor, who then would have to pay the client.
Different types of bonds.
There are three main types of surety bonds.
Contract bonds – also known as performance bonds and serves as fulfillment of contractual obligations. Based on performance and, the parties in this contract can specify the expected time of completion, materials to be used on the project.
Payment bond – guarantees that the contractor will pay certain workers, subcontractors, and material supplies.
Bid or tender bonds.
Provided by the party winning the tender as a guarantee that they will supply the goods or service for which they won and should they fail, the bond money will be used to meet the cost of fresh tendering. This guarantees the contractor is capable and qualified to complete the project.
Other types of bonds include:
Licenses and permit bonds – These types of bonds are usually required by government bodies and can be a federal state, as part of the licensing process. Each profession has its license bond depending on the particular business need. The bond is a guarantee that your business will act according to all regulations and laws, protecting both the state and customers.
Fidelity bonds
no one likes cheats. This list of bonds protects policyholders from losses incurred as a result of fraudulent acts by specified individuals and or dishonest employees.
By now the question of cost to get bonded and insured has probably run through your mind.
The cost of getting bonded and insured is influenced by several factors;
- type of bond preferred.
- level of coverage required.
- profession.
- deductibles.
- federal state or governing body in which the business is operating.
In some unique cases such as license bonds, credit scores of different professions can determine the amount of bond to be paid. Medical professionals including nurses and doctors are a good example.
In other cases, some bonds are paid as a premium while some are paid as a percentage of the coverage sum your content with.
Does your business need bonding?
The honest answer is YES.
As illustrated, you can never be too certain about life and its eventualities. In construction, career Endeavour, the performance of a variety of trades, and property management; it all can be tricky and dangerous. Failure to plan and financially protect oneself against these risks can result in substantial financial and physical harm to both the contractor and the party for whom the contractor is working. Bonding is a good idea to adapt and sometimes it is a requirement by the law
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