Types of Bonds Worth Considering
Types of bonds your business might need are so numerous that it’s easy for the uninitiated to get overwhelmed at times. However it certainly doesn’t pay to throw caution to the wind and go with whatever; you need to carefully examine the nature of your business in order to determine exactly what coverage you need. If you don’t have time to do this yourself then consulting a good insurance agent is the best course of action.
What are some of the most common types of bonds?
Some of the most important bond types include performance bond insurance, license bonds, fidelity bonds and loss instrument bonds.
Performance bonds are an important part of the construction industry. With a performance bond you can assure contract issuers that they won’t suffer any financial loss should your construction company fail to complete the work outlined in the contract (usually for reasons of bankruptcy).
License bonds are for businesses that require special licenses to operate. The bond is intended to protect your business if complications arise from some misuse of the license. For example if your business has a license to sell pharmaceuticals, and someone purchases medicine without a prescription, the license bond could come into play in the event of any legal action.
Fidelity bonds protect your business should any financial loss occur due to the dishonest behavior of an employee. A fidelity bond can refer to just one employee or all employees depending on the nature of your business. For example in some businesses an accountant might have more opportunity for abuse than a technician and so may be a more appropriate candidate for a fidelity bond.
Lost instrument bonds are appropriate for financial services and other businesses that issue a lot of assets. These types of bonds protect your business from any loss that occurs as a result of re-issuing a security.
Read more in: Performance bonds
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