Acquiring bonding insurance should be a priority, whether you’re a business entity or consumer. Bonding insurance is essential in providing coverage against fraud, deception, sudden bankruptcies, and penalties. If you want to safeguard yourself against these types of incidents, then you may consider the following things.
Investigating Surety Bonds
So, what is bonding insurance? Well, surety bonds, while still insurance, are different than traditional policies, in that they are part insurance and part credit. Generally, three distinct parties are included in these types of bonds
- The Principle
- The Obligee
However, the obligee is the direct benefactor for bond insurance policies since the obligee is backed, then paid by the Principal. If you’re still confused, Moody Insurance explains what bonding insurance is even further.
Breaking Bonds Down
Since there are so many surety bonds out there, which ones are typically most useful? Contract bonds can be especially valuable to consumers because they ensure a general contractor’s labor and materials, while Performance bonds guarantee individuals maintain the terms of a contract. Then, there’s also Payment and Bid bonds, which either guarantee contractor payments or bid amounts.
Bonding insurance is useful in safeguarding yourself against various unexpected scenarios. Now that you’re more informed, you’ll be able to make better coverage decisions and create a more secure environment for either yourself or your business.