Bonds can benefit your business and help you build trust with your clients. In some circumstances, they may be required. If you need to purchase a bond, our agency can assist you in obtaining the right bonds for your business. Contact us today to get started.
What Are the Types of Bonds?
Businesses may need two common types of bonds: surety and fidelity. Surety bonds provide assurances that you will fulfill your contract or follow applicable regulations, while fidelity bonds insure against your workers’ dishonest acts.
Surety bonds are an agreement among three parties:
- The principal is the party that buys the surety bond.
- The obligee is a private or governmental party that requires the principal to secure a bond.
- The surety is the entity that underwrites the surety bond, such as an insurance company.
The obligee may file a claim against the bond if a principal doesn’t adhere to the surety bond’s terms. Then, if the situation cannot be remedied with the principal, the surety may provide financial compensation to the obligee. If that occurs, the surety will typically seek reimbursement from the principal for that payment.
Fidelity bonds are a type of business insurance that may financially protect against specific dishonest acts. Two kinds of fidelity bonds include the following:
- First-party fidelity bonds may cover acts of employee dishonesty (e.g., fraud, forgery or theft).
- Third-party fidelity bonds may provide coverage for dishonest acts by individuals working for your business on a contract basis.
Contact Us Today
Elkins Insurance Group can help you get the bonds you need. Contact us for more information.