Bonds

Your business aspires to provide reliable and timely services to its clients and customers. However, even the most well-meaning companies may occasionally come up short. This makes it necessary for you to be prepared for financial repercussions, such as by having the right bonds in place.

While bonds are often essential, they can also be complex and confusing. Fortunately, the team at On the Coast Insurance Agency is standing by with guidance.

What Are Bonds?

Bonds are a loss control tool often sold by insurance companies that can provide financial security and peace of mind for parties that enter into business agreements. While often referred to as bonds insurance, these products differ from traditional insurance policies by typically covering a specific client or contract rather than providing ongoing coverage for a set period. Coupling the right bonds with an adequate insurance portfolio allows your business to enjoy robust and versatile financial security.

Types of Bonds

Bonds may come in many forms and understanding the right investments for your business is essential. While there are many subsets of these financial instruments, most can be classified as one of the following:

• Surety bonds—These products form a financial agreement among the following three parties:

• The principal (e.g., your business) may be required to purchase bonds if the obligee deems them necessary.

• The obligee (e.g., your client) determines if bonds are necessary to secure their financial interests and can recoup losses for which the principal is at fault.

• The surety (e.g., your insurance company) underwrites and maintains bonds, allowing the obligee a means of compensation before potentially pursuing the principal to recover their own costs if necessary.

• Fidelity bonds—These bonds are also known as honesty bonds and may help offset losses arising from dishonest, criminal or fraudulent acts committed by your employees, including contract workers. Specifically, fidelity bonds may help compensate clients for the following acts:

• Theft

• Burglary

• Destruction of property

• Fraudulent transactions

• Forgery

• Vandalism

We’re Here to Help

Contact On the Coast Insurance Agency to learn more about how bonds can financially protect your business and its clients.