Bonds insurance is an important type of insurance policy for business owners in certain lines of work. Here at Allen Jones Insurance Agency, we want to help business owners in Seguin, TX and the surrounding areas better understand this type of insurance.
What Is Bonds Insurance?
This type of insurance is designed to work among three parties. The insurance company, the business purchasing the insurance, and a third party whose performance is being insured. This means that you as the employer are purchasing the insurance coverage to cover your employee’s behavior and performance when doing their job.
This type of insurance is often needed for companies that are working inside people’s homes, working with their children, or working on their vehicles. You need this type of coverage any time there is a chance that an employee’s behavior or performance might cause damage to property or injury to an individual.
How Does This Coverage Work?
When you have bond insurance in place, it means that the insurance policy will pay for expenses of a liability that might result from your employee’s behavior or performance. For instance, if you owned a house cleaning service in which employees enter clients’ homes, and an employee damaged something in the home. A claim could be filed to pay for the expense of the damage.
What Happens Without Bond Insurance?
Certain types of businesses need bond insurance to even operate legally. In addition to this, potential customers and clients want to see that you have this type of insurance place before they will choose to do business with you. This is an investment you make to bring peace of mind to customers and to protect yourself from liability.
We Are Here To Help!
If you would like to learn about commercial insurance and how it can help your business, please contact us at Allen Jones Insurance Agency serving Seguin, TX and the surrounding areas.
While there are many types of insurance products that you may be familiar with, there are equally as many insurance products that you may be unfamiliar with. Here at Allen Jones Insurance Agency, serving the greater Seguin, TX region, one of the insurance products that we offer is called bond insurance.
This is not a type of insurance that many people are familiar with, and as such, you may be wondering what it is and who can benefit from it. Our team of insurance experts is here to assist with all your queries.
What Is Bond Insurance?
Bond insurance is insurance that is designed to offer compensation if a contractor does not comply with the terms of their contractor. Building contractors are the most common type of company to secure bond insurance. They tell customers that they will complete a home, building, or renovation project to their satisfaction by a specific date.
If the job is done incorrectly or not by the estimated date, the individual who hired the contractor can file a claim against the insurance and be compensated for any losses or expenses caused by the contractor not fulfilling their obligation or contractual duties.
Who Can Benefit From Bond Insurance?
Bond insurance can benefit the customers who hire contractors, and contractors themselves. When you hire a contractor that has bond insurance, you know that the contractor has insurance if the job is not completed correctly or they run behind schedule. As a contractor, you know that you have insurance to protect you against running behind schedule or mistakes, helping to protect you against lawsuits in these situations.
Contact Us Today
If you are a contractor who guarantees your work will be completed properly and/or by a certain date, your clients may want you to purchase bond insurance to ensure that you can back up the claims you make. At Allen Jones Insurance Agency, we can help contractors and business owners in the greater Seguin, TX region purchase bond insurance. Reach out to us today to obtain an estimate or to start the process.
When you open a business in the Seguin, TX area, you’ll need to file for a business license, set up a merchant account, and purchase insurance. Some types of businesses require the company to provide it qualifies as “bonded and insured.”
That typically applies to construction firms and financial firms. If you need to go inside an individual’s home, the local or state government may require a surety bond. This protects your customers from loss if you or your workers perform shoddy work.
Bond Insurance: What You Need To Know
Bond insurance isn’t a common policy type. Your typical candy store or barber shop doesn’t need bond insurance. This specialized type of policy provides enhanced protection of finances.
Each local government sets business requirements for commercial entities within its borders. Since Allen Jones Insurance Agency serves Seguin TX and its surrounding areas, we won’t try to address every town’s requirements here.
What you should know
General contractors, plumbers, electricians, masons, etc. typically carry bond insurance. Financial institutions also frequently carry this type of insurance. Any type of business that handles money for financial instruments, such as insurance, loans, stocks, other assets, purchases bond insurance.
You’ve probably watched a TV commercial that ended with the words “bonded and insured.” Not only does the law require that but knowing this should provide the consumer with some peace of mind. It lets them know that, regardless of what happens, they’ll get compensated.
Purchasing the bond and/or bond insurance ensures that you can provide the funds to compensate them if you use the wrong joists in a construction project or your employee embezzles from the stock fund.
Contact Us Today
Contact Allen Jones Insurance Agency serving the greater Seguin, TX community, for more information on bond insurance. Let us help you legally insure your business.
Bonds insurance is a critical type of coverage for any business owner because it guarantees your customers payment if you fail to meet conditions laid out within the terms of the contract. Having bonds insurance can be a huge benefit for growing your customer base because it provides peace of mind to your customers that they will be paid even if you fail to live up to your terms of the deal. Surety bonds are not to be concerned with professional liability insurance because they safeguard third-party companies and not yourself from mistakes.
Bond insurance can be confusing so let’s define a few of the key terms:
- Principal: The business that purchases the bond is known as the principal.
- Obligee: The customer or company that hires your business is known as the obligee. The bond protects the obligee from any fraudulent work that the principal causes.
- Surety Company: The financial organization that is selling the bond to your business (principal). If you do not meet the terms and conditions within your contract to the obligee, the surety company will need to do a payout.
Bond insurance guarantees that your business will fulfill the contract terms with failure resulting in a claim being made with the surety company to recover losses. At Allen Jones Insurance Agency in Seguin, TX we understand that bond insurance can be confusing. We encourage you to give us a call to speak with one of our knowledgeable insurance professionals who can walk you through the ins and outs of bond insurance. At the end of the call, we’ll help you decide if bond insurance is right for your business.
Allen Jones Insurance Agency knows bond insurance can be confusing. But, it’s also beneficial.
Serving Seguin, TX, the agency hopes to help by answering five common questions about bond insurance.
What is a bond?
Let’s start with the basics. A bond is an instrument of debt. Essentially, it’s an "I.O.U." between a borrower and a lender. Although there are a variety of types, bonds are used most by governments, municipalities, and companies.
What is bond insurance?
A bond insurance policy guarantees repayment in the event of default. This applies to the principal and any related interest payments. By purchasing these policies, bond issuers receive several advantages that help in selling their bonds to the public. Bond insurance is also commonly called "financial guaranty insurance."
Who needs bond insurance?
Bond insurance isn’t for everyone. It is mostly seen in tandem with asset-backed securities or municipal bonds. It can also be added to infrastructure bonds, like public-private partnerships and some regulated, non-U.S. utilities.
Why purchase bond insurance?
Bond insurance helps issuers in several ways. Primarily, these policies enhance a buyer’s credit rating. With bond insurance, companies or government entities obtain a much more favorable score because the risk is reduced. An insurer will evaluate this when determining premiums.
How does insurance affect a bondholder?
Bond insurance is attractive to potential investors too. If a bond has an improved credit rating, it is more appealing because bondholders can buy it with greater peace of mind. If a default does occur, the bondholder should face little disruption, as the insurer fills the gap by inheriting the liability and continuing to make payments.
Find an agent serving Seguin, TX
If you have any more questions regarding bond insurance, Allen Jones Insurance Agency can help. Their experienced agents are only a phone call away. Contact them today.