This guide walks you through the process of getting a business bonded and insured. Learn what it means to be bonded, what a bond is for, and where to get a bond.
Bonding Insurance Overview
Typically, the governing body (obligee) that regulates the specific bonding requirement will tell a business if they are required to be both insured and bonded.
Bonds and insurance are two separate products. Surety bonds are a type of insurance, but there are many differences between the function of insurance and bonds. There are also differences in the surety bonding process and the process for obtaining insurance. A business needs to first determine if a surety or a fidelity bond is needed. A surety bond is required by a third party (usually the government) while a fidelity bond is insurance for the business.
Surety bonds include a three party agreement between the obligee, the principle, and the surety company. Bond insurance is known as “financial guarantee insurance”.
Bonds are a risk management tool that strengthens a business financially and ethically. A business that is able to tell customers they are bonded and insured has an excellent way to express the reliability and trustworthiness of their company.
Where to Buy a Bond
It is important for a business not to go through an insurance agent for a bond, since a bond is a specific type of insurance that needs to be processed by a skilled surety bond agent. Using an insurance agent could cause delays and ultimately a higher cost. Surety1 knows how to properly and legally handle claims while achieving the best possible rates for clients.
What it Means for a Business to Be Insured
Bonding insurance for a business means the bond issuer guarantees the repayment of the principal (the business). If a business is insured, that means it has the proper insurance and has made payments to a surety company to be protected by a bond.
A common case in which bonding insurance is crucial is when a worker gets hurt on the job, and a claim can be filed against the business’ insurance. For example, if a company is hired to fix a driveway and an employee gets hurt while working, then a claim can be filed against the homeowner’s insurance. However, if that company is bonded and insured, then the claim will be filed against the company’s insurance instead. When deciding on a company to hire, clients will choose a bonded and insured company since they know that they will be protected after an unwanted incident.
There is only a one-time cost to purchase a bond with Surety1. Surety1 agents strive to achieve the best possible rate for their clients. The factors that play into cost for a bond are the credit score of the applicant, bond type and amount, and the underwriter that is chosen.
Examples of Insured Businesses
These are two examples of business types that are required to be both insured and bonded.
Notary bonds are required in most states such as California to protect clients of the Notary from misconduct or unethical acts by the Notary. A Notary bond is inexpensive and lasts for 4 years.
A Collection Agency
A Collection Agency Bond is required in some states and protects the customers of collection agencies from fraud and ensures the agency is abiding by State statutes.
Steps How to Get Bonded and Insured
Follow these steps to your business bonded and insured. The particulars may vary for your specific business, but this should serve as a general guide.
1. A business should be required by an obligee to be bonded, licensed or insured. The obligee is the person or entity that is requiring you to get your business bonded, such as the State or the Department of Motor Vehicles.
2. Check with the state government to find out if a bond is required for a certain type of business.
3. Find a qualified bond agency such as Surety1. Local insurance agents may be able to help with surety bonds, but they are not as experienced and do not have access to the best available bonding programs.
4. After the steps above are completed, visit Surety1.com to apply for the bond. It is free to apply, so there is no obligation until you’ve decided to proceed with obtaining the bond. A Surety1 agent will be in contact with you shortly after application. The agent will discuss cost and answer any extra questions you may have.
5. If the agent requests them, provide any extra supporting documents. An experienced agent will have the bond ready for shipment either the same business day of application or the following business day.
6. Once you pay for your bond, it will be shipped directly to you. Payment for the bond is paid in full and can be made on the Surety1 website or over the phone. Surety1 agents work to find clients the best possible rate for the bond in a timely manner. Surety1 provides multiple shipping options to get your bond to you as quickly as possible.
7. After you receive your bond in the mail, you can turn it in to the governing body that requires the bond (the obligee).
Apply for Your Bond
Surety1 provides all bonds for business, licensing, construction, permit, and court purposes. To get started, apply online for the bond that you need.
1. Complete an online application.
2. One of our surety experts will call and email you with the firm quote and an agreement to sign.
3. Provide payment and your signed agreement, then you will receive your bond!
Get More Help
Call us toll free at 877-654-2327. We have live surety bond agents available Monday – Friday, 8:00 – 4:30 Pacific Time. We’re happy to help!
Surety1.com is a service of AssuredPartners, one of the largest and fastest growing insurance agencies in the nation. Since 2003, Surety1 is the leading online provider of surety bonds nationwide.