Surety bonds are often associated with insurance. This is understandable for a few reasons. Bonds provide coverage for losses that are incurred and are often sold by insurance agents. The difference however is that with surety bonds they must be noted where as regular insurance does not.
In the article below we will discuss several types of surety bonds that small businesses need. There are about twenty five thousand types of surety bonds available. Below we will discuss the five most common types of bonds that a variety of small businesses should consider having before they begin operating.
Surety Bonds for Construction
Within the construction industry bonds are often required of contractors. A license and permit bond is often required before a license is issued whereas performance bonds are more job specific.
License and permit bonds are required of contractors before a license can be issued. This is to safeguard residents within the state from financial losses. These bonds are often inexpensive based upon the contractor’s credit rating. They can cost anywhere between two hundred and one thousand dollars.
Performance bonds are issued based upon the job. It is issued to cover the performance that is contracted; this can be for a variety of reasons such as having a deadline to follow or a budget to stay within. When a contractor is licensed and bonded it provides a financial confidence to their clients that the project they are contracted to provide will occur as stated within the contract.
Surety Bonds for Cleaning Businesses
When your occupation requires that you enter private property, such as in cleaning and janitorial services, it is important to acquire a janitorial service bond. With the access workers are given to personal belongings it is important to have reassurance that businesses and homeowners are protected from theft.
When a cleaning crew is licensed and bonded they are providing extra assurance. Their clients are protected from the service provider and their employees in case of thievery. These bonds are inexpensive and communicate that your business is one that can be trusted.
Surety Bonds for Notaries
Integrity is important when it comes to notaries and the services that they provide. A notary is a legal authority that authenticates documents. A notary bond is purchased to protect against notaries that choose to act unethically. A notary bond is usually inexpensive often as low as thirty dollars for a four year term and don’t usually provide a concern for those looking to become notaries.
This type of bond is issued based on a set of conditions that must be met in order for the notary to become licensed. These conditions must be met before they are allowed to conduct notary services within a state.
Surety Bonds for Car Dealers
A motor vehicle dealer bond is required in order to provide protection against unethical practices that are committed by car dealers and their employees. This is a relatively inexpensive business expense for most car dealers. A motor vehicle bond prevents customers from being deceived by car dealers. It offers assurance that car dealers will not sell stolen cars or sell a car based on misleading information.
As you can see is that surety bonds are not insurance but more a type of reassurance that the goods and services that are provided to consumers will be provided in good faith. Surety bonds are purchased in order to prove that business is done in good faith. It is an extra guarantee that goods and services are provided as contracted.